THE EXAM QUESTION

We’ve recently reported on the sacrifices medium to high income households are making in order to cope in these increasingly tough financial times (see ‘The Cost-of-Living Crisis: Bigger Sacrifices’) and we were curious to understand how this is likely to impact on Christmas spend. Christmas is traditionally a time to splash out regardless, but will that hold in 2022?

So, what impact is the cost-of-living crisis really having on festive plans? Will there be radical festive cut-backs, or will it be Christmas as usual?

THE ANSWER

Christmas 2022 is shaping up to be a year of major cut-backs, the likes of which nobody would have predicted this time last year. Plans are afoot to spend prudently and to conjure up festive magic without getting carried away.

But there’s nothing bah humbug about it and Christmas is far from cancelled. It’s just that, for many, the cost-of-living crisis has forced something front of mind which was already known deep down. As the Grinch put it, “What if Christmas doesn’t come from a shop?” What if festive joy is all about time spent with those you care about, and is possible without new year debt? For many brands and retailers that’s a deeply troubling conclusion for their shoppers to have come to.

Plans are in place for a radical reduction in Christmas spend achieved by…

BUYING PRESENTS SENSIBLY

RESTRICTING FOOD & DRINK TO WHAT WILL BE TRULY APPRECIATED

CREATING FESTIVE EXPERIENCES & EVENTS ON A BUDGET

THE APPROACH

We asked 20 of our FastQual ready respondents (broad mix from above to below average affluence) to talk to us about their festive intentions: how they’re planning, budgeting, shopping and celebrating in 2022, and whether it differs to previous years.

SO WHAT?

With widespread festive cut-backs planned across numerous categories, brands and retailers will need to battle for their share of a reduced Christmas spend pot. Ploughing ahead regardless of changing festive needs risks alienating customers and missing out on new festive opportunities.

Where changes are still possible, Christmas 2022 plans should be reviewed and, given the longer-term economic outlook, a thrifty customer mindset should also be planned on for Christmas 2023.

CHRISTMAS IS A FEELING

Last year a lot of people were having a mindful but expensive Christmas. We didn’t want to consume (too) wastefully, but the association between Christmas and over-indulgence held strong. The cost-of-living crisis has accelerated reappraisal of festive priorities and in 2022 we’re sure that joyous time spent together is the only thing that truly matters.

LAST CHRISTMAS

  • We talked about the true meaning of Christmas
  • Charitable acts eased consumer guilt
  • We consumed mindfully, focusing spend on what would be most loved, useful or thoughtful

THIS YEAR

  • We’re sure it’s all about time together
  • We’re buying only what’s necessary for enjoyment
  • We’re cutting out anything which might get wasted

 

“What if Christmas doesn’t come from a store? What is Christmas perhaps means a little bit more?”*

*The Grinch, 1957

Tis the season to be thrifty

Once ‘enjoyable time together’ is established as the one truly important element of Christmas, a number of products and services are very vulnerable to being sidelined. It is easy for people to decide which spend is crucial and what can be cut without too much impact on festive magic.

CRUCIAL FOR A MAGICAL CHRISTMAS

  • Time off work
  • Loved ones together
  • Presents for children
  • Enjoyable food & drink for the main event(s)
  • Build up events (to build festive spirit and spend time with those you won’t see on the main event days)

VULNERABLE TO CUT-BACKS

  • Presents for grown-ups
  • Over-indulgence and ‘just in case’ food and drink
  • More expensive versions of food and drink
  • Cards
  • Expensive events and experiences
  • New decorations
LORRAINE
I’m only buying presents for my son this year. The rest of the family have agreed that we all have what we need and the bit we love is having time to spend together.
ALLY
I love the matching Christmas pyjamas thing but I’d say they’re fun but unnecessary. I don’t think I can justify getting them this year, and will anyone really miss them?
MADELEINE
This year I’ll immediately delete offer emails for things I don’t need. If it’s not on my list I don’t care how cheap it is, it’s still money I don’t need to spend.

In many categories, brands will be battling for their share of reduced Christmas spend. For those who don’t fully understand their customers’ new festive needs, or make the most of emerging opportunities, it will be a bleak midwinter.

All I want for Christmas is… something sensible

People are absolutely clear that this isn’t a year for needless extravagance and are determined to shop for presents with their sensible heads on. The plan is to buy less, buy useful, and find cheaper ways. Splashing out is more acceptable for children but wasteful purchasing is still frowned upon.

Most vulnerable:

ELIMINATIONS
  • Presents for grown-ups
  • Hugely extravagant luxuries
  • Novelty, filler and ‘just because’
  • Just because it’s cheap/on offer

Opportunities:

CONSTRUCTIVE PRESENTS
  • Useful, practical
  • Presents which reduce fuel usage/waste
  • Unaffordable experiences
  • Everyday/smaller luxuries
CHEAPER WAYS
  • Homemade (think kits, materials, ideas)
  • Second hand
  • Small but thoughtful
  • Family Secret Santas
LISA
My favourite perfume is £125 which can’t be justified this year, so I’m happy to settle for nothing.
REBECCA
Normally it would be something like an expensive handbag but this year I’d like practical clothes or a day out
KEELY
I’ll make as many presents as I can this year, for example teacher presents and Christmas Eve boxes

Rockin’ around the Christmas tree… it’s free

A Christmas in lockdown had us all desperate for Christmas experiences outside of the home: the theatre, Christmas light walks, grottos and more. This year there is a desire for festive ‘build up’ experiences, and we will still want to celebrate with those we don’t see on the key Christmas days, but many will be looking for free, cheaper or DIY alternatives… and this creates opportunities.

 

OPPORTUNITIES

  • Help customers create DIY sparkle and shine and bring festive experiences into the home
  • Put Christmas shopping and eating out back on the list of must-do festive experiences by dialing up in store/restaurant/bar festive magic (Galeries Lafayette, The Ivy
  • Brasseries and garden centres are great examples often given by respondents)
  • Promote rental options on single use festive products (from eveningwear to crockery) Promote festive experiences as presents or offer as loyalty programme rewards
LINDA
I’m politely declining a number of Christmas events this year, to save money and reduce travel costs
BOBBIE
We usually do a festive theatre trip and this year we still will be but it will be tied in as one of the kids’ presents
MILLIE
I’ll attend events I really have to this year but I can’t stretch to all of the usual. It’s not just the events, it’s the outfits

Christmas is coming and the goose… might be replaced with something cheaper

For the grown-ups, food & drink is at the centre of festivities, but that doesn’t mean they can’t easily think up products they could trade down on, or skip altogether, without anyone really noticing. This year spend is reserved for food and drink which will be fully appreciated, so extras or upgrades need strong justification.

 

CATEGORIES TO DEFEND

  • ‘Just in case’ food (e.g. extra mince pies, biscuits, cakes, savoury snacks, chocolates, nuts)
  • Main event ‘extras’ (e.g. additional side dishes, additional puddings, cheeseboard)
  • More expensive upgrades
  • Meat (cutting back and switching to cheaper versions)
DAVE
Christmas lunch will be a roast dinner and I know everyone will be happy with it. I won’t be getting the Heston desserts or extensive cheeseboard. It sounds no frills but the kids don’t care about the food anyway.
ANNETTE
I’ll be buying a frozen turkey from Iceland rather than my usual £80 one fresh from the farm shop. I really doubt anyone will know the difference once I’ve prepared it in my usual way.
RUSSELL
I won’t be filling the cupboards with ‘just in case’ food, I always do that and it’s a big waste of money. And I’m not buying anything I don’t really need just because it’s on offer.

OUR KEY RECOMMENDATION

This Christmas we’re seeing an unprecedented determination to avoid excessive spend and reduce waste. Brands and retailers should assess Christmas plans through this lens and ask themselves three questions:

  • ARE YOU APPROPRIATELY DEFENDING YOUR MOST VULNERABLE PRODUCTS/CATEGORIES?
  • ARE YOU CAPITALISING ON ALL RELEVANT FESTIVE OPPORTUNITIES?
  • ARE YOUR COMMUNICATIONS IN SYNC WITH CUSTOMERS’ FESTIVE NEEDS?