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Christmas Shopping Habits - UK - February 2009

Christmas 2008 and the post-Christmas January Sales brought an extraordinary year in retail to a close.

The ‘credit crunch’ rapidly turned into meltdown in financial markets in October 2008 when the banking crisis exposed the extent to which banks had overlent. As a consequence, the economy was drawn deeper into recession as consumer confidence, already weakened by falling house prices and rising unemployment, was further undermined by falling asset values, tighter credit, and widespread uncertainty and insecurity about the future.

Christmas 2008 gained early billing as potentially the worst Christmas in living memory and the failure of a number of major retailers in early December certainly gave the impression that this was going to be the case. But, heavy discounting by Woolworths’ administrators (to ensure that the business was wound up devoid of stock) altered the competitive environment and may have actually helped stimulate spending as other retailers reacted with aggressive promotions to maintain market share and ensure full sell through of seasonal merchandise.

The second half of 2008 was very challenging for retailers, but the prospect of a period of prolonged recession, or even depression, looks daunting. This report provides insight into how consumers responded in 2008 and assesses how they might react to worsening economic conditions in 2009.

Key themes
  • How did recessionary pressure affect trade over Christmas 2008?

  • Who has been most affected by the state of the economy?

  • Did people cut back on luxuries and spend more on essentials?

  • Did the failure of several major retail businesses depress or stimulate spending?

  • How important were pre-Christmas promotions and did some retailers panic too soon?

  • Did online fare any better than store-based retailing?

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
          • Retail sales data
            • Abbreviations
            • Future Opportunities

              • Christmas is a time for a little luxury even in times of austerity
                • Marketing the Christmas shopping experience
                  • Meeting the need for multi-channel Christmas shopping
                    • Online needs to be profitable just as much as store-based retailing
                    • Market in Brief

                      • Recessionary pressure slowed retail spending
                        • Dash for cash saw widespread discounting
                          • Major food retailers gained share of spend…
                            • …while household goods was the major loser in non-food
                              • Home shopping ahead of the market, yet again
                                • Clothing retailers struggled but young fashion and discounters did well
                                  • Children the catalyst for high spending
                                    • Not everyone affected by the recession
                                      • Emphasis on practical gifts this year
                                      • Internal Market Environment

                                        • Key points
                                          • Weak trading exposed underperforming businesses
                                            • Woolworths the biggest high street casualty
                                              • Figure 1: Retailers entering administration, November 2008 to January 2009
                                            • Promotional strategies disrupted by Woolworths stock clearance
                                              • Decision to close a key issue
                                                • Knock-on effect negative for some…
                                                  • …positive for others…
                                                    • … but terminal for Zavvi
                                                      • Stimulating sluggish spend – Sale days back in vogue
                                                        • Marks & Spencer double dose provided no quick fix
                                                          • Several other retailers used this mechanism as well…
                                                            • Know who your friends are
                                                              • Stimulating sluggish spend – structured discounts and product promotions
                                                                • Targeted discounting widespread
                                                                  • …but some didn’t discount at all…
                                                                    • Ensuring that it still pays to shop early
                                                                      • Early on sale dates still in favour…
                                                                        • …but last-minute shoppers also good for business
                                                                          • Canny shoppers wait for the Sales
                                                                            • More opportunities to shop late
                                                                              • More stores open late this year
                                                                                • Modest growth forecasts can become a self-fulfilling prophecy
                                                                                  • Underdone stock commitments worse than an undercooked turkey
                                                                                    • Online continued to gain ground
                                                                                      • Growth rates healthy but slowing
                                                                                        • Building free delivery into retail pricing
                                                                                          • Online not the safe haven that many have supposed
                                                                                            • More space means more choice but Britain is overshopped
                                                                                              • 2008 a bumper year for new retail space
                                                                                                • More business failures anticipated in 2009
                                                                                                • Broader Market Environment

                                                                                                  • Key points
                                                                                                    • Banking crisis took economy further into recession
                                                                                                      • Bailout of banks shows extent of crisis
                                                                                                        • Tighter credit led to withdrawal of credit insurance cover for suppliers
                                                                                                          • High debts and tighter lending affect ability to spend
                                                                                                            • Rising unemployment cause and effect of recessionary pressure
                                                                                                              • Job losses increasing
                                                                                                                • Negative employment prospects further undermine confidence
                                                                                                                  • Crashing asset values further undermines confidence
                                                                                                                    • House prices dive
                                                                                                                      • Share values undermine investment returns and pensions
                                                                                                                        • Savers take the downside of historically low interest rates
                                                                                                                          • Some good news about
                                                                                                                            • Falling interest rates good news for tracker mortgage holders
                                                                                                                              • VAT cut a step in the right direction
                                                                                                                                • Fall in oil prices helps bring down cost of living
                                                                                                                                  • Falling inflation boosts PDI
                                                                                                                                    • Population trends positive
                                                                                                                                      • More under-fives to buy for
                                                                                                                                        • More people to buy for
                                                                                                                                          • More households to equip
                                                                                                                                            • More older people to buy for
                                                                                                                                            • Market in Context

                                                                                                                                              • Key points
                                                                                                                                                • The most important trading period for all retail categories
                                                                                                                                                  • Certain sectors most exposed to December trading
                                                                                                                                                    • Further weakening of December contribution
                                                                                                                                                      • Figure 2: Seasonal analysis of retail sales value – proportion of sales taken in December, by sector, 1995-2008
                                                                                                                                                    • Fourth quarter also lessening in importance
                                                                                                                                                      • Figure 3: Seasonal analysis of retail sales value – proportion of sales taken in fourth quarter, by sector, 1995-2008
                                                                                                                                                  • Strengths and Weaknesses in the Market

                                                                                                                                                    • Strengths
                                                                                                                                                      • Weaknesses
                                                                                                                                                      • Who’s Innovating?

                                                                                                                                                          • Promotions
                                                                                                                                                            • Presentation
                                                                                                                                                              • Products
                                                                                                                                                                • Places
                                                                                                                                                                • Review of Christmas Trading 2008

                                                                                                                                                                  • Key points
                                                                                                                                                                    • 2008 – Outturn weak but not as bad as feared
                                                                                                                                                                      • Food retailers and home shopping specialists outperformed
                                                                                                                                                                        • Figure 4: December, year-on-year change in sales value, by sector, 2006-07 and 2007-08
                                                                                                                                                                      • Food retailers strongest in fourth quarter
                                                                                                                                                                        • Figure 5: Fourth quarter year-on-year change in sales value, by sector, 2006-07 to 2007-08
                                                                                                                                                                      • Food retailers, home shopping companies and specialist non-food retailers all did well in 2008
                                                                                                                                                                        • Figure 6: Retail sales annual change, by value, not seasonally adjusted, 2006-07 and 2007-08
                                                                                                                                                                    • Christmas Spending Patterns

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Spending patterns lower than last year
                                                                                                                                                                            • Figure 7: Perceptions of spending compared to last year, January 2008 and 2009
                                                                                                                                                                          • Not everyone affected by recession
                                                                                                                                                                            • Not all younger people immune from recession
                                                                                                                                                                              • Evidence of cutting back among affluent consumers
                                                                                                                                                                                • Less affluent and retireds hardest hit
                                                                                                                                                                                  • Who spent what?
                                                                                                                                                                                    • Figure 8: Amount spent at Christmas on gifts for close friends and family, January 2009
                                                                                                                                                                                    • Figure 9: Average spend on close family and friends for Christmas 2008, by demographics, January 2009
                                                                                                                                                                                  • Many young people are low spenders
                                                                                                                                                                                    • Middle ground populated by broad-based group
                                                                                                                                                                                      • High expenditure groups led by families
                                                                                                                                                                                        • Internet users marginally more likely to be higher spenders
                                                                                                                                                                                        • Christmas Gifting Patterns

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • What were the most popular gifts?
                                                                                                                                                                                              • Figure 10: Comparison of purchasing of gifts, January 2008 and January 2009
                                                                                                                                                                                            • Practicality counts
                                                                                                                                                                                              • Easy gift solutions are popular
                                                                                                                                                                                                • Charities not being forgotten in the recession
                                                                                                                                                                                                  • Who bought what
                                                                                                                                                                                                    • Figure 11: Profile of those buying the top five gifts at Christmas, January 2009
                                                                                                                                                                                                  • Get the message across to women
                                                                                                                                                                                                    • Money talks but gift cards could be made more attractive
                                                                                                                                                                                                      • Linking with charities at Christmas time
                                                                                                                                                                                                        • Internet use increasingly significant
                                                                                                                                                                                                        • Christmas Shopping Attitudes and Behaviour

                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                            • Attitudes and behaviour when gift shopping
                                                                                                                                                                                                              • Figure 12: Comparison of attitudes towards Christmas gift shopping, January 2008 and January 2009
                                                                                                                                                                                                            • Discount days attracted high-spending consumers
                                                                                                                                                                                                              • More early bird shoppers this year…
                                                                                                                                                                                                                • …but online less successful at attracting early birds
                                                                                                                                                                                                                  • ABC1 pre-/no family adults continuing to overspend
                                                                                                                                                                                                                    • Fewer squirrels this year
                                                                                                                                                                                                                    • Impact of Online on Christmas Shopping Behaviour

                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                        • Online continuing to grow in importance
                                                                                                                                                                                                                          • Figure 13: Usage of the internet for christmas shopping, january 2008 and January 2009
                                                                                                                                                                                                                        • It’s a multi-channel world
                                                                                                                                                                                                                          • High levels of satisfaction
                                                                                                                                                                                                                            • Many users not using online for gift buying, price comparison, or ideas
                                                                                                                                                                                                                              • Room for improvement
                                                                                                                                                                                                                                • Secret sales need to be a badly-kept secret
                                                                                                                                                                                                                                  • Fulfilment remains a stumbling block
                                                                                                                                                                                                                                  • Christmas Shopper Typologies

                                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                                      • Identifying targets
                                                                                                                                                                                                                                        • Four types of Christmas shopper
                                                                                                                                                                                                                                          • Figure 14: Size of Christmas shopping attitudinal groups, January 2009
                                                                                                                                                                                                                                        • Who are they?
                                                                                                                                                                                                                                          • Figure 15: A summary of the attitudinal groups, January 2009
                                                                                                                                                                                                                                        • Savvy shoppers – 29% of the sample – the primary target
                                                                                                                                                                                                                                            • Figure 16: Variation from average spend, by attitudinal group, January 2009
                                                                                                                                                                                                                                          • Laissez-faire – 18% of the sample – give them ideas
                                                                                                                                                                                                                                            • Leave it late – 23% of the sample – cash management an issue
                                                                                                                                                                                                                                              • Be prepared – 31% of the sample – significant but hard to motivate
                                                                                                                                                                                                                                                  • Figure 17: Attitudinal groups and their agreement on key statements, January 2009
                                                                                                                                                                                                                                              • Retail Competitor Analysis

                                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                                  • All retail sales
                                                                                                                                                                                                                                                    • Predominantly food retailers – includes all food, drink and tobacco specialists
                                                                                                                                                                                                                                                      • Predominantly non-food retailers
                                                                                                                                                                                                                                                        • Mixed goods – Non-specialised non-food stores
                                                                                                                                                                                                                                                          • Clothing and footwear stores
                                                                                                                                                                                                                                                            • Household goods stores
                                                                                                                                                                                                                                                              • All other non-food specialists
                                                                                                                                                                                                                                                                • Jewellers:
                                                                                                                                                                                                                                                                  • Sports and leisure:
                                                                                                                                                                                                                                                                    • Music and entertainment retailers:
                                                                                                                                                                                                                                                                      • Toys and games retailers:
                                                                                                                                                                                                                                                                        • Other miscellaneous non-food retailers
                                                                                                                                                                                                                                                                          • Non-store retailing
                                                                                                                                                                                                                                                                          • Appendix – Christmas Spending Patterns

                                                                                                                                                                                                                                                                              • Figure 18: Perceptions of spending compared to last year, January 2009
                                                                                                                                                                                                                                                                              • Figure 19: Perceptions of spending compared to last year by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, special groups and supermarket used, January 2009
                                                                                                                                                                                                                                                                              • Figure 20: Spending on Christmas gifts for close family and friends, January 2009
                                                                                                                                                                                                                                                                              • Figure 21: Spending on Christmas gift for close family and friends, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, special groups and supermarket used, January 2009
                                                                                                                                                                                                                                                                          • Appendix – Christmas Gifting Patterns

                                                                                                                                                                                                                                                                              • Figure 22: Items bought as Christmas gifts, by demogrphic sub-group, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, special groups and supermarket used, January 2009
                                                                                                                                                                                                                                                                              • Figure 23: Items bought as Christmas gifts, by demogrphic sub-group, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, special groups and supermarket used, January 2009
                                                                                                                                                                                                                                                                              • Figure 24: Items bought as Christmas gifts, by demogrphic sub-group, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, special groups and supermarket used, January 2009
                                                                                                                                                                                                                                                                          • Appendix – Christmas Shopping Attitudes and Behaviour

                                                                                                                                                                                                                                                                              • Figure 25: Shopping behaviour at Christmas, by demographic sub-group, January 2009
                                                                                                                                                                                                                                                                              • Figure 26: Shopper behaviour at Christmas, by demographic sub-group, January 2009
                                                                                                                                                                                                                                                                              • Figure 27: Shopper behaviour at Christmas, by demographic sub-group, January 2009
                                                                                                                                                                                                                                                                              • Figure 28: Average spend on close family and friends for Christmas, by general attitudes towards Christmas shopping, January 2009
                                                                                                                                                                                                                                                                          • Appendix – Impact of Online on Christmas Shopping Behaviour

                                                                                                                                                                                                                                                                              • Figure 29: Christmas shopping and the internet, January 2009
                                                                                                                                                                                                                                                                              • Figure 30: Christmas shopping and the internet, by demogrphic sub-group, January 2009
                                                                                                                                                                                                                                                                              • Figure 31: Christmas shopping and the internet, by demogrphic sub-group, January 2009
                                                                                                                                                                                                                                                                              • Figure 32: Average spend on close family and friends for Christmas, by attitudes towards Christmas shopping and the internet, January 2009
                                                                                                                                                                                                                                                                          • Appendix – Christmas Shopper Typologies

                                                                                                                                                                                                                                                                              • Figure 33: Attitudinal groups and their general attitudes towards Christmas shopping, January 2009
                                                                                                                                                                                                                                                                              • Figure 34: Attitudinal groups, by detailed demographics, January 2009
                                                                                                                                                                                                                                                                              • Figure 35: Attitudinal groups and what they bought for Christmas, January 2009
                                                                                                                                                                                                                                                                              • Figure 36: Attitudinal groups and how their spending for Christmas 2008 differed compared to the previous year, January 2009
                                                                                                                                                                                                                                                                              • Figure 37: Attitudinal groups and their attitudes towards Christmas shopping and the internet, January 2009

                                                                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                                                                          • Adams Childrenswear Ltd
                                                                                                                                                                                                                                                                          • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                                                                                                                          • Alexon Group
                                                                                                                                                                                                                                                                          • Alliance Boots UK Retail
                                                                                                                                                                                                                                                                          • Ann Summers Ltd
                                                                                                                                                                                                                                                                          • Argos
                                                                                                                                                                                                                                                                          • Asda Group Ltd
                                                                                                                                                                                                                                                                          • ASOS
                                                                                                                                                                                                                                                                          • Aurora Fashions
                                                                                                                                                                                                                                                                          • Austin Reed Group Ltd (Retail)
                                                                                                                                                                                                                                                                          • Bank of England
                                                                                                                                                                                                                                                                          • Barratts Trading Ltd
                                                                                                                                                                                                                                                                          • Baugur
                                                                                                                                                                                                                                                                          • Bay Trading Ltd
                                                                                                                                                                                                                                                                          • Bensons Bed Centres Ltd
                                                                                                                                                                                                                                                                          • Bhs Ltd
                                                                                                                                                                                                                                                                          • Birthdays Ltd
                                                                                                                                                                                                                                                                          • Blacks Outdoor Retail Ltd
                                                                                                                                                                                                                                                                          • BP Oil UK (retail)
                                                                                                                                                                                                                                                                          • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                                                                          • Burberry Group Plc
                                                                                                                                                                                                                                                                          • Celebration Holdings
                                                                                                                                                                                                                                                                          • Clinton Cards Plc
                                                                                                                                                                                                                                                                          • Co-operative Group
                                                                                                                                                                                                                                                                          • Comet Group Ltd
                                                                                                                                                                                                                                                                          • Council of Mortgage Lenders
                                                                                                                                                                                                                                                                          • Currys
                                                                                                                                                                                                                                                                          • Debenhams Total (GTV)
                                                                                                                                                                                                                                                                          • Dixons Retail Plc
                                                                                                                                                                                                                                                                          • Dunelm (Soft Furnishings) Ltd
                                                                                                                                                                                                                                                                          • Empire Direct PLC
                                                                                                                                                                                                                                                                          • Envy Retail
                                                                                                                                                                                                                                                                          • Envy UK
                                                                                                                                                                                                                                                                          • Farepak Ltd
                                                                                                                                                                                                                                                                          • Fat Face Ltd
                                                                                                                                                                                                                                                                          • Figleaves.com
                                                                                                                                                                                                                                                                          • Findel plc
                                                                                                                                                                                                                                                                          • Game Group
                                                                                                                                                                                                                                                                          • Gap Inc
                                                                                                                                                                                                                                                                          • Government Actuary's Department (GAD)
                                                                                                                                                                                                                                                                          • Greggs Plc
                                                                                                                                                                                                                                                                          • Habitat
                                                                                                                                                                                                                                                                          • Halfords Ltd
                                                                                                                                                                                                                                                                          • HMV Retail Ltd
                                                                                                                                                                                                                                                                          • HobbyCraft Group Ltd
                                                                                                                                                                                                                                                                          • Homebase Ltd
                                                                                                                                                                                                                                                                          • House of Fraser Plc
                                                                                                                                                                                                                                                                          • Ideal Shopping Direct Plc
                                                                                                                                                                                                                                                                          • Internacionale Ltd
                                                                                                                                                                                                                                                                          • J. Sainsbury
                                                                                                                                                                                                                                                                          • Jacques Vert Group Ltd
                                                                                                                                                                                                                                                                          • JD Sports Fashion plc
                                                                                                                                                                                                                                                                          • JJB Sports Plc
                                                                                                                                                                                                                                                                          • John Lewis Partnership
                                                                                                                                                                                                                                                                          • Kingfisher UK & Ireland
                                                                                                                                                                                                                                                                          • Klick Photopoint Ltd
                                                                                                                                                                                                                                                                          • Land of Leather Ltd
                                                                                                                                                                                                                                                                          • Laura Ashley Group
                                                                                                                                                                                                                                                                          • Liberty Retail Plc
                                                                                                                                                                                                                                                                          • Lidl (UK)
                                                                                                                                                                                                                                                                          • M and M Direct Ltd
                                                                                                                                                                                                                                                                          • Majestic Wine Warehouse Ltd
                                                                                                                                                                                                                                                                          • Marks & Spencer
                                                                                                                                                                                                                                                                          • Matalan Ltd
                                                                                                                                                                                                                                                                          • Max Spielmann Ltd
                                                                                                                                                                                                                                                                          • MFI Furniture Group Plc
                                                                                                                                                                                                                                                                          • Midcounties Co-operative Ltd
                                                                                                                                                                                                                                                                          • Mothercare Plc
                                                                                                                                                                                                                                                                          • N Brown Group Plc
                                                                                                                                                                                                                                                                          • Nationwide Building Society
                                                                                                                                                                                                                                                                          • Netto Foodstores Ltd
                                                                                                                                                                                                                                                                          • New Look Group Plc
                                                                                                                                                                                                                                                                          • Next Group
                                                                                                                                                                                                                                                                          • Northern Rock plc
                                                                                                                                                                                                                                                                          • Oasis Fashions Ltd - UK
                                                                                                                                                                                                                                                                          • Ocado Ltd
                                                                                                                                                                                                                                                                          • Office for National Statistics
                                                                                                                                                                                                                                                                          • Office Holdings Ltd
                                                                                                                                                                                                                                                                          • OXFAM
                                                                                                                                                                                                                                                                          • PC World (DSG UK Computing)
                                                                                                                                                                                                                                                                          • Peacocks
                                                                                                                                                                                                                                                                          • Poundland Ltd
                                                                                                                                                                                                                                                                          • Poundstretcher
                                                                                                                                                                                                                                                                          • PriceLess
                                                                                                                                                                                                                                                                          • QS Group Ltd
                                                                                                                                                                                                                                                                          • Selfridges Retail Ltd
                                                                                                                                                                                                                                                                          • Shop Direct Group
                                                                                                                                                                                                                                                                          • Signet Group
                                                                                                                                                                                                                                                                          • Somerfield
                                                                                                                                                                                                                                                                          • Sony (UK) Ltd
                                                                                                                                                                                                                                                                          • Spar UK Ltd
                                                                                                                                                                                                                                                                          • Superdrug Stores Plc
                                                                                                                                                                                                                                                                          • Ted Baker
                                                                                                                                                                                                                                                                          • Tesco Plc
                                                                                                                                                                                                                                                                          • The Carphone Warehouse Ltd
                                                                                                                                                                                                                                                                          • The Jessops Group Ltd
                                                                                                                                                                                                                                                                          • The Officers Club Ltd
                                                                                                                                                                                                                                                                          • The Original Factory Shop Ltd
                                                                                                                                                                                                                                                                          • The Pier Retail Group Ltd
                                                                                                                                                                                                                                                                          • The Sofa Workshop Ltd
                                                                                                                                                                                                                                                                          • The TJX Companies
                                                                                                                                                                                                                                                                          • Theo Fennell Plc
                                                                                                                                                                                                                                                                          • Thorntons Plc
                                                                                                                                                                                                                                                                          • TJ Hughes Plc
                                                                                                                                                                                                                                                                          • Topps Tiles (UK)
                                                                                                                                                                                                                                                                          • Trafford Centre
                                                                                                                                                                                                                                                                          • USC
                                                                                                                                                                                                                                                                          • Virgin Group Ltd.
                                                                                                                                                                                                                                                                          • Viyella
                                                                                                                                                                                                                                                                          • Waitrose
                                                                                                                                                                                                                                                                          • Waterford Wedgwood Retail Ltd
                                                                                                                                                                                                                                                                          • Waterstones Booksellers
                                                                                                                                                                                                                                                                          • West Coast Capital
                                                                                                                                                                                                                                                                          • WH Smith PLC
                                                                                                                                                                                                                                                                          • Whittard of Chelsea
                                                                                                                                                                                                                                                                          • Wm Morrison Supermarkets
                                                                                                                                                                                                                                                                          • Woolworths Group plc
                                                                                                                                                                                                                                                                          • Zavvi

                                                                                                                                                                                                                                                                          Christmas Shopping Habits - UK - February 2009

                                                                                                                                                                                                                                                                          £1,995.00 (Excl.Tax)