Christmas coming early is usually a phrase reserved for something special happening. This year, Christmas coming early to retailers is anything but – shoppers are already buying their gifts, hoping for early bargains as they battle to keep down costs.
Research among beauty shoppers by Superdrug out this week reveals a 219% rise in pre-Christmas sales across its stores and website, with the retailer seeing shoppers buying bargains for gifts now as they seek to celebrate Christmas, but on a much tighter budget.
What is worrying is that Superdrug isn’t alone in seeing this shift; it is happening across all retail, as shoppers spooked by cost of living rises and economic uncertainty seek out ways to buy and save on gifting.
The overall result is that there is a very real worry that Peak spending this year will be down – for the first time ever.
According to research by Vouchercodes.co.uk, this will be the first decline in festive spending outside of the pandemic. Sales are expected to decrease by £2.51bn (3%) compared to Christmas 2021 (£84.7bn), falling below 2019’s pre-pandemic results (£83.1bn) as record inflation hits shopper wallets.
However, sales are not expected to plummet to the levels seen during Christmas 2020, during the peak of the pandemic (£79.7bn).
The worse news is that the retailers that rely most heavily on selling gifts are likely to be hit the hardest, the research suggests. The report forecasts a 6.8% decline in gift spend compared to 2021 (£11.59bn v £12.44bn), with consumer electronics bearing the brunt of this decline, as £2.27bn is forecast compared to £2.7bn in 2021. This is followed by clothing and footwear with a decline of -12.1% and jewellery at -11.1%. However, in better news for stockists of alcohol and confectionary, consumers are set to spend 6% more on these gifts this Christmas than in 2021 (£89m versus £84m).
Where consumers buy these bargains is also changing. According to the annual Social Media Trends 2023 Report: From insights to action: how to disrupt a disruptive consumer from Talkwalker in partnership with Khoros, consumers will turn to new shopping channels, including social commerce and even the metaverse to hunt down better experiences and heavy discounts.
The study points to China, where social media drives ecommerce and where, slowly, metaverse and other VR experiences are starting to make in-roads into online selling.
The fact that we are already talking about Peak in October certainly points to a very changed retail environment. Inflation is at an eye-watering high, political uncertainty continues to dog the UK economy and war still threatens energy prices – these factors all impact how consumers feel. There is a vague hope that a new prime minister may yet stabilise the markets, while a warmer than predicted October may yet see energy prices fall. Could these things combine to lower inflation in time for a late Christmas boost? We can only hope that Christmas won’t continue to come early, but will show up just in the nick of time.