Markus Schmaus, VP UK at growth management platform Recurly, explores how Christmas is a threat as well as an opportunity for retail – but subscriptions can help turn festive shoppers into long-term loyal customers.
Christmas is an emotional time. It is festive, family-focused and laden with high expectations. Presents have to arrive on time, the turkey must be cooked to perfection, and the mince pies better be fresh. For consumers, it is one of the most high-pressure seasons of the year. A time when reliability from businesses is not a “nice to have” but an absolute necessity.
That pressure places extraordinary weight on the companies that fuel our Christmases. Retailers, supermarkets, delivery platforms and digital services face a season that is truly high risk, high reward. When things go well, brands earn positive associations that can last for years. When things go wrong, the damage can be swift and potentially irreversible, with customers lost for life.
And the benefits of subscriptions in this area to build loyalty is of particular interest. More than a third of surveyed subscribers (35%) say they have faced issues during peak shopping periods like Christmas. That’s toy dinosaurs undelivered, XXL socks for grandma and broken golf clubs for dad – and 45% of subscribers say they would switch to a competitor if disruptions occurred at critical moments. Christmas magnifies both the opportunity and the threat.
Supermarkets and the battle for Christmas
Nowhere is this more evident than in grocery retail. For supermarkets, Christmas is the most important trading period of the year. Stocked shelves are non-negotiable as demand spikes for everyday essentials and festive staples. Marketing budgets swell, with retailers competing to outdo one another – and often John Lewis – in delivering the most heart-warming, sentiment-laden campaigns of the season.
Alongside the emotional pull, aggressive pricing strategies come into play. Discounts on key Christmas products are designed to drive footfall and online traffic, with the hope that shoppers will fill their baskets with higher-margin items once inside. Yet price and advertising alone are no longer enough. Each year, retailers experiment with new techniques to differentiate themselves and capture incremental market share – and subscriptions are seeing an increase in interest across sectors.
One recent example is Waitrose’s decision to extend MyWaitrose discounts to products purchased via Deliveroo. Last-minute grocery delivery through third-party apps is a relatively new phenomenon, but one that has grown rapidly in popularity. At Christmas, it has the potential to be a genuine game-changer.
Gone are the days when a forgotten ingredient meant pulling on boots and braving the snow to hunt down cranberries – like in festive hit “Christmas Wrapping” by The Waitresses. Instead, missing items can be delivered to the doorstep in minutes. For time-poor, stressed households, that convenience is invaluable. And with many delivery apps offering premium subscription tiers to provide an optimised service, again the pressure increases to show value for money for subscribers.
These kinds of partnerships point to the future of differentiation in supermarket retailing. In an increasingly digital, instantaneous world, consumers expect to meet their Christmas needs from the comfort of their homes, ideally via their smartphones. The brands that can remove friction at the most stressful moments will gain far more than a single seasonal transaction.
A nightmare before Christmas (and after)
However, when emotions are running high, the margin for error shrinks dramatically. A wrong gift, a delayed delivery or a missing ingredient can quickly turn a Christmas miracle into a Tim Burton-esque nightmare.
Before committing to bold promotions or launching new services, retailers must rigorously validate their ability to deliver at scale. Christmas places extraordinary strain on supply chains, fulfilment networks and technology stacks. Supermarket subscription offerings, like Tesco Delivery Saver, can hook in a paying customer at Christmas who might want to get a priority service for their food shops, but a sudden uptick in use during this season requires planning. Scaling any service is a significant logistical challenge for physical goods, but digital services are not immune either.
A year punctuated by high-profile technology outages, from CloudFlare to AWS, has exposed vulnerabilities across many organisations. Only the most resilient and well-prepared businesses have been able to avoid disruption, and in doing so, capitalise on competitors’ failures. At Christmas, those weaknesses are amplified, and consumers are far less forgiving.
Turning Christmas success into year-round loyalty
So, what do you do when you have succeeded at Christmas? Orders arrived on time, shelves stayed stocked and customers were satisfied.
The groundwork for loyalty is laid when standards are consistently high during the most demanding moments. Delivering under pressure earns trust and respect from consumers. It means competence, reliability and value.
But loyalty is not a one-off Christmas gift received in December. It is a continuous commitment. Consumers who sign up to a new subscription at Christmas, just to try it, will expect the same standard throughout the year – and if it slips, they will not hesitate to explore alternatives. But most importantly, these paid subscriptions must still prove their value to consumers. Our research shows that when trying a new subscription, value for money is the most important factor for 89% of users. Christmas provides a rare opportunity to demonstrate that value at scale.
If a business can prove it understands customer needs when the stakes are highest, the door to year-round loyalty is left wide open. Christmas may only come once a year, but the brands that win it properly can reap the rewards long after the snow has melted and the tinsel is taken down.
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