‘Tis The Season: Christmas Spending

14 Dec, 2018 | Articles

What could Christmas bring for your business?

As the saying goes: Christmas comes but once a year, but for many businesses it’s a seasonal gift – one that starts as early as October, and just keeps on giving until the New Year.

Food, hospitality and entertainment

The festive season means a spike in celebrations. That delivers big bonuses for restaurants and function centres catering for the gamut of office parties, family gatherings, and Christmas and New Year functions.

With an average spend of $250 per person on Christmas food and alcohol, the specialty and luxury food market also sees a boom in sales. Add to that the popular choice of alcohol and food hampers as special gifts.

Retail bonanza

The big Christmas winner is the retail sector. Australians will spend about $25 billion this season – on average about $1,325 each, according to finder.com. Christmas spend on decor items alone will run about $1 billion.

Retailers compete more fiercely every year for the ‘silly season’ dollar – especially with online retailing giants that have no geographical borders.

Gift buying is huge. The average spend is up to $500 per head- a bill of more than $11 billion. High on the list are cosmetics and beauty products, toys, clothing and electronics.

Purchasing follows a fairly predictable pattern. About 90% of shoppers plan to have Christmas shopping done before mid-December. The reality is often different. Last minute purchases probably say more about poor planning than savvy shopping, as retailers often save their discounted offers until the post Christmas sales.

For Christmas 2018, the general outlook among retailers is positive. According to survey results from Deloitte, 4 out of 5 predict higher sales this season, particular online, where they estimate growth of more than 10%. More than 80% of retailers also seem confident that the recent arrival of Amazon Australia will have no significant impact on their seasonal trading.

When making online purchases, however, customers want fast delivery and free (or low) shipping costs. Smaller online retailers, therefore, struggle to compete with the giants, finding it difficult to absorb rising freight costs.

Other industries reaping the benefits

Heavy retail activity boosts profits for freight movers and trucking companies; they experience their busiest period in the days and weeks leading up to Christmas. Major stock deliveries to retail outlets and the massive increase in parcel deliveries means their holiday-related load is over capacity, despite many taking on extra staff.

The quieter achievers at Christmas are the payment processors, who handle the increased volume of seasonal purchases. And then there’s the predictable Christmas credit card debt.

Travel is still big business. Reports from the airlines and travel agencies vary, but according to Expedia, around 12 million people took time off over the Christmas period last year. SkyScanner reported that 70% of Australians put travel of some kind on their Christmas wish list last year and although many took advantage of early bookings to secure flights, up to 40% of those waited too long and chose not to pay the premium prices for travel in the peak period between 21 December and 5 January.

What Do Customers Want For Christmas?

As always, all consumers are looking for a positive experience, high convenience and low prices.

But different market segments – based on age groups and spending power – want different things at different times. Whatever the industry, it is essential to analyse the available market information. Whether it’s about the most effective promotions, the right goods at the right price points, or the transaction mode itself, providing superior customer experiences will yield the best results. The details are in the data, but not all retailers are maximising the opportunity it offers.

PwC’s Retail Report for 2017 sums it up this way: ‘The retailers who have invested in data analytics capability are winning in the war to be more personal, more relevant and more responsive to shoppers today’.

So if you’re already thinking about Christmas 2019, that may be a good place to start.

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