The Covid-19 crisis is set to have a significant impact on the festive season with over half of Brits (52%) saying they plan to spend less on gifts, food and drink, and a quarter (24%) saying they plan to reduce their Christmas budget significantly by £100 or more.
A survey by FMCG mobile app Shopmium asked consumers their reasons for cutting costs this Christmas. One in four (25%) said they don’t feel like being extravagant because of Covid, while 21% will be spending Christmas with less people due to the pandemic and therefore spending less money. Almost half (48%) of respondents said because they have less disposable income compared to 2019. This is an increase of 17% from August when a third (31%) said they had less disposable income.
In comparison to those reducing spend, just 6% intend to increase their Christmas budget slightly, while no respondents said they plan to increase it significantly. The products consumers plan to reduce spending on most drastically are gifts (36%), Christmas decorations (31%) and alcohol (29%). More than four in 10 (43%) also intend to spend less on specific premium Christmas products such as turkey, champagne and desserts, and 83% are looking for more discounts and ways to save money this Christmas versus last year.
Two thirds (63%) of Brits plan to spend Christmas at home this year as opposed to visiting friends, family or restaurants, and over one third (34%) of those who intend to host Christmas dinner plan to cut costs on the meal compared to last year. One third (30%) of shoppers also intend to make changes to the grocery products they purchase, with half (51%) saying they’re aiming to be healthier this Christmas, while 39% intend to buy more local produce, and 34% products with less packaging.
During the first lockdown, a previous Shopmium survey highlighted a marked decrease in store visits with 41% of consumers making only one visit to a supermarket per week and just 16% making three or more trips. Shopmium’s most recent research showed that by mid-October consumer grocery habits had returned to pre-lockdown patterns, with more than half of consumers (51%) visiting supermarkets three or more times a week and 16% going only once. While the second lockdown is likely to reduce visits slightly, local tiered lockdowns and news of increased Covid-19 rates prior to lockdown two, did not deter consumers from making more frequent shopping trips.
The rates of online shopping have remained steady throughout the pandemic. Shopmium research conducted at four intervals during the last seven months found that the percentage of consumers purchasing an online shopping order within the previous seven days was around a quarter (24%). In its latest survey, the majority (64%) of UK consumers said they plan to do their Christmas shop in a physical store this year.
Yet people do still have concerns about visiting physical stores because of coronavirus, and asked if they would continue to wear face masks in supermarkets if they weren’t compulsory, two thirds (66%) said they would. This is an increase of 13% from August.
When asked how much of their Christmas grocery shopping is pre-planned before they go to the supermarket, 91% said they write a shopping list, although 42% are open to being swayed on specific brands when they go to buy. A quarter (27%) partially plan their shopping list, and then choose some additional products or brands when they go to buy. Only 8% don’t use a shopping list or pre-plan products to purchase at all.
Although many consumers are looking to reduce their overall spend on food and drink this Christmas there are particular products they are willing to spend more on. A quarter (24%) of shoppers plan to increase spend on premium meat and fish such as turkey and smoked salmon, as well as confectionery such as chocolate and sweets. Snacks also rate highly with 23% of consumers planning to spend more on these, while one in five (20%) will increase their budget on fresh fruit and vegetables. Although a third of consumers plan to spend less on alcohol, one fifth (21%) say they will spend more.
Shopmium’s UK Head, Stuart Sankey, commented: “It’s clear that the coronavirus pandemic will drastically change shopping habits this festive season. Covid has certainly dampened Christmas spirits and its effect on people, whether as a result of having less disposable income or the fact they’re planning to spend Christmas at home with less people, is being felt by consumers across the board who intend to keep a tighter cap on purse strings.
“That said, FMCG brands still have a major advantage to reach consumers currently. While it’s reasonable to expect that the second lockdown may decrease the number of times some consumers visit supermarkets each week, the majority still intend to shop in bricks and mortar stores as opposed to online. We also predict spend per basket will be higher in light of consumers eating more at home due to restaurant closures. And with the majority of Brits intending to have their Christmas dinner at home this year, FMCG brands have a greater opportunity to convert festive consumers than in previous years.
“For brands, the best way of pandemic-proofing their business is by driving interest before shoppers visit a store, seeing as nine in 10 consumers pre-plan what they’re going to purchase in advance. In these challenging times, it’s important that brands listen to consumers and also demonstrate sensitivity to the situation. The brands that are going to cash in this Christmas will be the ones that demonstrate a strong value proposition for consumers, and respond to the changing demands of shoppers who want healthier options, more local produce and less packaging.”
NAM Implications:
- Given the uncertainty in most of their lives and livelihood…
- …it should come of no surprise that consumers are too scared to spend.
- Add to this the disincentives to shop physically…
- …and that Lockdown 2 is so close to Christmas.
- “For brands, the best way of pandemic-proofing their business is by driving interest before shoppers visit a store, seeing as nine in 10 consumers pre-plan what they’re going to purchase in advance”.
