The season for spending

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By Dr Sarah Montano
Birmingham Business School

Shopping malls and retail parks are still going to be busy this year, so get ready to squabble over the last pack of sprouts while listening to Wham on repeat!

It is that time of year again! For TV channels it is the time of small towns and snowy scenes and for retailers, it is the Golden Quarter when they seek to maximise their revenue streams. But what does this mean for customers? Given the cost-of-living crisis, what impact might this have on Christmas shopping habits? There are several trends that we may see this year.

There is always the perennial complaint that “Christmas starts too early,” with tubs of Quality Streets etc. arriving in-store at roughly the same time as the summer BBQs. But as much as we might moan, early arrivals are good for customers and the retailer as they allow customers to spread the cost of their Christmas shopping across a few months and for the retailer it smooths out their supply chain, so they are not trying to get all the Christmas products into their stores in the last few weeks.

The trend for second-hand shopping is not slowing down. We are seeing charity shops recently have their most successful weeks, with sales up by 22% as compared to pre-pandemic times, and overall second-hand shopping grew by 27.2% in 2021. We, therefore, anticipate that second-hand shopping will be popular with customers this year, as they shop for gifts and that all-important Christmas outfit. The drivers of this trend are not only the cost of living but also concern for the environment. According to IBM’s research 62% of customers say that they will change their shopping behaviours to reduce their impact on the environment, so a move to second-hand shopping is a key part of these changing customer behaviours. Apps like Vinted, Thrift+ or even shopping at an online charity shop make second-hand shopping much more convenient and easier for the customer. Second-hand shopping is a more sustainable way to shop and saves a customer money, so they gain in both ways!

Speaking of Christmas outfits, these will once again be something that customers are looking for as we emerge from the pandemic. The last couple of Christmas’ have allowed for very limited socialising due to concerns about COVID. However, this year it is anticipated that customers will once again get together and celebrate and to do that they need a party outfit! As above, we will see customers buying second-hand but an interesting trend is that we may see the return of the heel! Post lockdown customers turned to athleisure as a major trend, as they sought to maintain their WFH comfort. Post-pandemic customers gave up their heels and sought comfort in trainers, however, this year’s party season is bringing back the heel as customers try and find a bit of joy after such difficult times.

How much customers are willing to spend on a new pair of dancing shoes is another question. There are mixed reports about how much customers will spend this Christmas, due to the impact of the cost of living. Some reports are stating that many customers will be keen to spend this Christmas while other people will be forced to cut back dramatically. However, those customers who want to spend will still be on the lookout for a bargain. This means an unpredictable Christmas for retailers and they need to ensure that they are providing low-cost products for those customers in difficult times, with major supermarkets keen to promote their cheap Christmas dinner options. Black Friday and Cyber Monday have crossed the Atlantic to become firm fixtures in our retail diary. Retailers will schedule their festive sales around Black Friday however this year customers may not be getting quite the bargain they think as it has been reported that prices on Black Friday are the same as or even bigger than in previous months. Also, it is important to remember that something is only a bargain if you need it or are going to gift it! Cyber Monday is a continuing trend and is not so much about a bargain for customers but about getting ready for Christmas. Cyber Monday happens approximately 4 weeks before Christmas and starts in earnest as customers realise that Christmas is upon them, and they best get their gifts. Arguably, Cyber Monday is more of an important date for the retailer who will be prepared, and have their warehouses fully stocked, ready for those online orders.

Finally, where will people be shopping? During the pandemic we saw online sale peak at 37.8% of total retail sales in January 2021, however, online sales fell to a low of 24.6% in August 2022. Online sales have started to slowly increase over the last two months, so we would expect after Cyber Monday that we will see an increase in online sales, it is unlikely that online sales will return to the pandemic high. The reason for this is that customers do want to return to physical stores. Customers still find enjoyment and value in the store where you can try out the product, socialise and get immediate gratification from treating themselves to something shiny. Shopping malls and retail parks are still going to be busy this year, so get ready to squabble over the last pack of sprouts while listening to Wham on repeat!

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

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