It is true that a decent Easter and strong summer can provide some ballast for the annual numbers, but the Christmas season is the ‘make or break’ period for a grocer’s year. Ultimately, it sets the heartbeat for the January trading statements, which are the most important of the year and no retailer can afford to get it wrong.
So TV ads aren’t just a bit of fun. They need to attract new shoppers through the door during the festive period - in which 40% of their trading happens in just six weeks.
Courting the Christmas shopper is never easy, and getting things wrong over this period is now the biggest own goal for grocers. Forecasting so far out is tricky, and in these last weeks of trading, availability is the biggest pitfall. So avoiding out of stocks on the top 1,000 lines will be the major focus until the new year.
Right now, every retailer will be pouring over their weekly like-for-like sales numbers, trying to assess performance indicators so they can adjust their plans accordingly. All of them have had tightly worked ‘fast start plans’ for October and November, and time has run out to make any meaningful additional interventions to the December plan.
Some will of course throw money at relative underperformance, but fighting on price, promotion and value in a reactive way has always been a mistake so late in the year, impacting negatively on profitability in January and suggesting desperation rather than leadership.
Supplier planning has arguably benefited from an October Brexit let-off. The associated scenario planning means supply chains have probably never had so many contingencies. With online grocery orders and deliveries set to break new records in terms of their overall share of business, this supply flexibility may rescue many a category buyer who got their forecast wrong.
So who will emerge the winners? I think we will watch the discounters will double down on last year’s Christmas success. Now UK consumers have let them onto their precious Christmas table, I predict they will pick up 15% to 20% growth versus last year. Their only Achilles heel, and therefore biggest challenge, is to make the shopping experience quick and convenient, knowing late Christmas baskets are never filled in a relaxed shopper mode.
As for the big five, an increased market share would be the ultimate gift from Santa, and with Tesco’s new Clubcard Plus I’d put it down as the most likely to achieve this. None can afford a Christmas shocker, but the truth is that holding share and protecting margin would be a cracking result for Waitrose or Sainsbury’s, whilst languishing Asda and Morrisons will likely be the Yule logs.