All roads lead to the peak period for UK retailers. The golden quarter can make or break annual trading and 2024 brings intriguing economic contradictions to consider as planning ramps up.
Capitalising on the annual industry event Christmas in July – traditionally a time when retailers look towards the last quarter of the year by unveiling what they expect to be the biggest trends – our fourth annual Christmas Forecast report will help retailers prepare for peak in 2024.
It offers tangible strategies to help retailers maximise opportunities this Christmas, with exclusive category-based sales forecasts and analysis from Retail Week, leading retailers and our report partners Lloyds Bank, Marigold and Snap.
Consumer sentiment about the economy and shopper spending confidence has been inching up over the past few months, with GfK’s consumer confidence barometer reporting the overall index score to be -14 in June, strong growth from -24 at the same time last year and from the record low of -49 in September 2022.
However, consumer worries about high interest rates continue to curb spending. The Bank of England base rate has sat at its highest level for 16 years at 5.25%, with 14 rises since 2021. Speaking after the bank decided to hold rates in May, governor Andrew Bailey said he was “optimistic that things are moving in the right direction”, but added the bank needed to see more evidence that prices have slowed further before cutting interest rates. Consumers and retailers alike were optimistic about an interest rate cut in June, however, the bank chose to keep rates on hold for the seventh time.
Positively, even while interest rates remain high, the main measure of inflation, the consumer price index (CPI) hit the Bank of England’s 2% target in May 2024. Inflation was over 11% in October 2022 and the 2% figure is the lowest it has been in more than two years.
Most economists now expect an interest rate cut in the autumn, owing to other measures of inflation beyond CPI, which are taken into consideration when adjusting rates, remaining high. These include ‘core inflation’ – a measure not including food or energy prices – sitting at 3.5% in May and a 5.7% inflation rate for prices in the services sector.
Although retailers have continued to build margin in recent months after the economic challenges of 2022 and 2023, the indications are that deflation will be reflected in some of their pricing of consumer goods as 2024 draws on.
This bad news/good news economic climate is resulting in a “cautiously optimistic” attitude across retail, according to the founder of independent retail insights consultancy Retail Economics Richard Lim. He believes the last quarter of the year is set to be more fruitful in 2024 than it has been for several years.
But, as ever, the situation differs by sector as consumers prioritise spending in select categories. In this data-driven report, we assess the 2024 Christmas consumer and delve into Retail Economics’ latest predictions for golden quarter trading. We will also create a picture of what individual retailers’ peak period planning looks like and where retailers must prioritise investment to get ahead for the festive period.
The data behind The Christmas Forecast
This report incorporates exclusive data from independent research consultancy Retail Economics, including forecast data for Q4 (1 October to 31 December) 2024 and comparison data for Q4 2023.
Due to shipping costs increasing since this report was first published on July 4, 2024, Retail Economics has adjusted its forecasts for the retail sectors featured in this report. The copy and graphs were updated on July 23, 2024, to reflect this new data.
The past four years have seen mainly turbulent trading conditions, with retailers facing rising costs and, for a prolonged period, depressed consumer confidence, both coming hard on the heels of the disruption Covid-19 caused.
The cost-of-living crisis that hit in 2021 from a double whammy of accelerating inflation and interest rates was a reminder to retail about just how aligned its success is to the general health of the economy.
And while the pain of the past few years is not easy to put behind us, for retailers turning their attention to 2024’s peak period there are signs suggesting shoppers might be in a position to spend more this year, compared to recent golden quarters.
Consumer confidence is inching upwards and inflation is falling. At 2% as of May, it is at its lowest level for almost three years, although not yet at a level low or consistent enough to spark a cut in the base interest rate.
The Bank of England interest rate seems likely to have peaked at the current 5.25% and economists widely expect there will be a cut to come in the second half of the year. While Bank of England governor Andrew Bailey warned this was “not a fait accompli, it’s not a done deal”, August or September appear to be the most likely timing, assuming inflation continues to fall.
While there was disappointment in April as high street lenders confirmed increases to many mortgage products, the anticipated base rate cut should boost consumer confidence going into the peak trading period, partly owing to more certainty in the mortgage market for homeowners looking to renew.
Housing market forces have a huge impact on people’s disposable income and many homeowners who had to remortgage at the peak of rate rises in late-2022 and who will be coming to the end of those two-year contracts will be hoping for significantly lower rates, relieving some of the pressure from household finances in time for Christmas.
Confidence and spending power
The economic outlook is heavily influenced by consumer sentiment, with people’s spending fuelling two-thirds of the UK economy.
According to Retail Economics, perceptions of personal finances and spending intentions are improving and consumer pessimism has eased from a high of 62.4% of people expressing concerns in 2023 to 52.1% at the start of 2024.
Research firm GfK, which has been monitoring consumer confidence via its index (a measure of how people view their personal finances and broader economic prospects) for more than 50 years, also says there are signs of a more upbeat attitude from UK households.
“We’ve got 50 years of consumer confidence data and people in the UK are never particularly positive,” explains Neil Bellamy, consumer insights director at GfK. But “consumer confidence is gradually improving”. The average score (a reading above zero indicates optimism, while below zero indicates pessimism) since starting to track sentiment is -10; after Covid and the onset of the cost-of-living crisis the figure plummeted to its lowest at -49; in 2024 it has been around -14.
“We’re seeing a pattern – things are starting to level off,” Bellamy states, adding that the last time consumer confidence was in positive territory was in 2016, just before the Brexit vote. GfK also measures people’s personal finance situation over the next 12 months, which as of June was at +4 compared to -1 one year ago. “That adds to the feeling we’re maybe turning a corner,” says Bellamy.
The research team also asks 'is now a good time to buy?' The score for this metric is -23, two points higher than the same month last year.
“The recovery is not proportionate but those with the most money are showing increasing signs of confidence after a challenging time,” says Bellamy.
''Those with the most money are showing increasing signs of confidence after a challenging time''
Lloyds Bank's Market Intelligence report into December 2023 seems to align with this view, explains Rebecca Clacken, director of merchant card payments at Lloyds Bank.
She says: “Despite several years of cost-of-living pressures, the data suggests that some consumers perhaps used Christmas as a reason to splash out on luxury goods to enjoy the festive period. Between December 1 and 24, spend per customer at top-end supermarkets increased by 1.69% compared to the same period in 2022. Millennials, in particular, showed a clear preference for top-end brands.”
What's in store for Q4 2024...
How the fourth quarter and Christmas plays out, of course, remains to be seen, but Sonia López-Delgado, general manager for UK & Ireland at jewellery retailer Pandora, acknowledges “spending power is challenged”.
“While we are not seeing customers trading down, there is a shift where customers in lower spending brackets are reducing their purchase frequency,” she says. “This indicates a volume game rather than trading down when making purchases.”
Pandora was among the top-performing UK retailers for like-for-like Christmas sales growth in 2023, versus 2022. In the 13 weeks to December 21, like-for-like sales were up 9%. This compared to a -1% drop between the same period for 2022 versus 2021.
Julian Beer, store director at London department store Liberty, a retailer synonymous with Christmas shopping, says: “We're witnessing a consistent growth in spending among our customers year on year, indicating a positive trend for Christmas 2024. Footfall is also on the rise, reflecting increased consumer confidence and a need for experience.”
Retail Economics’ Richard Lim says: “Without a doubt, we’ve been through the worst of the cost-of-living crisis and heading into Christmas 2024 versus last year the situation is better for sure.”
Inflation is on the way down, having hit its 2% target by the Bank of England’s June report, while earnings are outpacing inflation which helps spending growth.
''Even with recent improvements, cautiously optimistic represents our choice of words for now''
However, both Lim and Bellamy suggest there is still some way to go in terms of people’s recovery from the sharp rise in the cost of living after the economically disruptive mini-budget in September 2022.
“Inflation was 11%, the Bank of England was predicting a two-year long recession and consumer confidence was at an all-time low, so even with recent improvements cautiously optimistic represents our choice of words for now,” says Lim.
The aspirational millennial
Although there appears to be more economic certainty compared to the build up to Christmas 2023, there are pockets of society set to be more financially challenged.
Retail Economics talks of the “aspirational millennial” a 30-40 year old who has grown up on cheap borrowing but is experiencing higher mortgage and other loan rates.
Many of this group will be coming out of fixed long-term mortgage into a much more costly environment, and that will curb their spending, Lim notes.
He also ties this in with the health of the luxury market, explaining that 2024 profit warnings at Burberry, Canada Goose and Gucci, and the collapse of Ted Baker are signs that the aspirational millennial is reining in their spending, which could negatively impact Christmas trade.
Interestingly, up to 69% of this cohort say they will pay more to shop with the brands they are loyal to, according to Marigold’s European Consumer Trends Index 2024, which surveyed 7,343 consumers from across Europe.
“The brands able to secure this loyalty are poised to benefit in a variety of ways,” says Marigold’s marketing strategist Georgia Gkolfinopoulou. “This millennial loyalty opens the door to increased revenue opportunities among customers while reducing the pressure of acquiring new customers."
Little luxuries
One shopping trend to be aware of during the golden quarter is consumers treating themselves to “little luxuries” as a reward for their prudent spending behaviour and to help them maintain an element of “control” as major global events continue to drive negative emotions.
That is the view of Kate Nightingale, consumer psychologist and founder of brand agency Humanising Brands, who says this is playing out as consumers look to treat themselves for their “savviness and hard work in securing a good deal”.
“Previously bad news would impact us a little bit but [now] because of all the huge events worldwide – for example, wars, the pandemic, the climate crisis – we haven’t calmed down,” she explains.
''We need to have indulgences; it is often the only thing that makes people feel in any remote way safe, a form of happiness to counteract the ongoing crises''
“We need to have indulgences, as it is one of the ways we as consumers can find some semblance of control; it’s a form of happiness to counteract the ongoing crises.”
This trend was predicted in our Christmas Forecast 2023 report, specifically for the health and beauty sector – and this year we expect to see this more widely across other categories.
Research Nightingale undertook alongside Ocado Retail (a survey of 2,000 UK adults which took place in January this year) highlights the trend further –some 48% of Brits agreed they intentionally look for good deals and then buy little luxuries as a form of retail therapy, with 84% admitting to purchasing small treats when grocery shopping.
It’s prevalent in other sectors too, with López-Delgado remarking that Pandora has noticed “a spike in special treat and sentimental purchases during tough economic times”. “We expect that this year, customers (or their loved ones) will either spend on the special item they have been wanting all year or on a very special sentimental item during difficult times,” she adds.
Can online cash in again?
Online retail now accounts for just over a quarter of all retail sales in the UK (26.2% as of May 2024), according to the Office for National Statistics, but during peak trading this percentage always goes up. In November 2023, online took a 30.7% share of the market – the highest it hit within the year, showing the importance of having a robust ecommerce offer ready for the Christmas consumer.
Figures from data insight specialist IMRG, however, paint a picture of a much more sluggish online market. Since the high growth rates seen during the pandemic, ecommerce revenue has declined -10% year on year in 2022 and -3% in 2023, with IMRG (which tracks the online sales of 200 retailers) forecasting 0% growth in 2024.
Andy Mulcahy, strategy and insights director at IMRG, says he expects Black Friday deals to come early once again to encourage consumers to spend pre-Christmas.
Last year, Barclays reported that nearly a fifth of consumers had started buying gifts by October to help spread costs. Retailers across the board sought to cash in on the opportunity, starting deals and promotions earlier than usual to capture this keen audience. For the past two years, Amazon has held a second version of its summer Prime Day deals in October.
Black Friday falls on what will be payday for many consumers this year, the last working day of the month, November 29, and closer to Christmas than last year. Mulcahy predicts a discount-led marketing drive will run through November, continuing the recent trend for Black Friday to be a multi-week sales event.
However, Mulcahy suggests ecommerce will need more than a good Black Friday period to rebound. According to IMRG, January to April 2024 online retail sales were down 4.7% compared to the same period last year, and Mulcahy says there is little sign of growth returning soon.
“We’re in a shambolic state. It was a terrible January and a poor April. Ecommerce is supposed to be the future, it shouldn’t be dying, but the economic situation has really impacted sales.”
He suggests a new government could help improve the mood of the nation going into peak, but adds that mortgage rate rises have really stymied consumer spend. It appears ecommerce, as much as any part of retail, will have to navigate obstacles this Christmas.
Last year's golden quarter didn't quite live up to its title. According to British Retail Consortium (BRC) chief executive Helen Dickinson 2023’s Christmas sales “failed to make amends for a challenging year”.
Data covering the five weeks from 26 November to 30 December 2023 published by BRC showed total UK retail sales increased by 1.7% in December, against a growth of 6.9% the year before – both were driven by high levels of inflation. Growth was below the three-month (2.3%) and 12-month (3.6%) average.
Despite the sluggish overall market, there were success stories last year.
Consumers made 488m trips to supermarkets in December 2023 –12m more than in 2022
Consumers made 488m trips to supermarkets over the four-week period to 24 December, 2023, according to Kantar – that’s 12m more than 2022 and the largest number during the Christmas period since before the pandemic.
A record £13.7bn of sales were made by grocers across the period, with the average household spending an all-time high of £477 during the month, up £28 on the year before.
Inflation of course played a role – but so did clever tactics, with Lidl and Aldi marketing their premium ranges to consumers looking to trade up, helping both achieve record festive sales.
Lidl saw overall sales increase 12% year on year across the festive period (four weeks to 24 December), with the Deluxe line sales increasing 11%. Aldi recorded its best ever festive period with sales topping £1.5bn for the first time, an 8% increase compared with the same period in 2022.
The Fragrance Shop said sales surged 6.5% year on year for the 13 weeks to 30 December, 2023, driven by new fragrance launches and “key range extensions, a compelling gift set collection, and a strong showing of seasonal favourites”.
Drinks retailer Majestic said in the eight weeks to 25 December, 2023, it served 63,000 new customers, boosted by the opening of six new stores in 2023, and a focus on investing in range, customer service and in-store expertise. Fine wine sales rose by more than 13% year on year over the two months as “customers traded up to treat their family and friends”. Total sales figures for the period were up 8.1% year on year, compared to a 0.2% growth for the same period from 2022 versus 2021.
Like-for-like sales at Marks & Spencer for the 13 weeks to 30 December, 2023, grew by 8.1% to £3,568m, with the company proclaiming its “bigger and better” stores had encouraged shoppers to spend more on core grocery items – not just focusing on Christmas-specific treats as had been the case in previous years. Blending M&S premium ranges with a push on its lower price ‘Remarksable’ offering also helped bring in a wider range of customers to M&S and increasing volumes.
But what can retailers expect in 2024? Retail Economics’ Richard Lim says fundamentally people got less for their money last year, but with inflation coming down there should be several sectors where sales from both a value and volume perspective spike in the forthcoming golden quarter.
Due to shipping costs increasing since this report was first published on July 4, 2024, Retail Economics has adjusted its forecasts featured in this report. The copy and graphs were updated on July 23, 2024, to reflect this new data.
Food and grocery
Last year was defined by a high inflationary environment, but this year is a different story with food inflation continuing to come down and values moderate.
With food inflation beginning to fall, now down to 1.7% from its height of 19.2% in March 2023, there can be an expected 3.8% rise in value for retailers compared with the previous year. This implies volume growth of 1.3%, aligning with pre-pandemic norms.
However, food spending is still expected to be polarised. Recovery in real income growth will support some households to trade up to more premium ranges, embracing the ‘treat yourself’ mentality. But many demographics will still be challenged by the economic headwinds, with price therefore remaining a key battleground for the grocers.
Unsurprisingly, the majority of the supermarkets are starting to rely more on personalised marketing and membership pricing to drive and retain customers – for example, Sainsbury’s Nectar Prices scheme and Morrisons More card programme. This investment in price is one reason why inflation will stay at moderate levels.
Other strategies are also being shown to lead to success, however. Retailers including M&S have committed to price reductions without a membership requirement. Its Remarksable Value range and other prices have been “dropped and locked” to give customers confidence in price integrity.
83% actively seek good deals on everyday groceries and 57% look to make savings through cheaper own-brand products and everyday essentials
Ocado research released in February highlights how today’s consumers shop at UK supermarkets – 83% actively seek good deals on everyday groceries and 57% look to make savings through cheaper own-brand products and everyday essentials, allowing them to justify adding ‘little luxuries' to their baskets.
Grocers helping provide support for their customers in tough economic times through reducing prices and providing member-only deals is an “empathy play”, according to consumer psychologist Kate Nightingale, who says it can result in consumers spending more than they otherwise would have when they feel like they have bagged a bargain.
Fashion
The success of the apparel sector has been difficult to predict in recent years. In last year's report, we forecasted an expected value growth of 6.2% in Q4 2023, but the reality was a 0.3% decline as the industry battled major headwinds in terms of residual stock and depressed consumer demand.
Things look a lot rosier for fashion in 2024, with many retailers reporting encouraging progress on shifting overstock and building a clearer, more streamlined proposition.
Fashion giant Next, for example, posted a 5.7% increase in total sales year on year for the 13 weeks to 27 April, 2024 – above its predicted guidance of 5% for the period. With ambitions to grow overseas, a continued push on development of its own and new brand products and prioritisation of its Total Platform – a service allowing third-party partners to “make use of Next’s online software and infrastructure”, the brand shows strong potential for sustainable, long-term growth through the festive quarter and beyond.
Another brand to watch this Christmas has to be Sosandar, which topped Retail Week’s 2023 Christmas league table reporting two years of impressive like-for-like sales growth – 23% 2023 versus 2022, and 30% for 2022 versus 2021.
The forecast for year-on-year growth of 1.9% by value and 2.4% by volume for the sector is indicative of consumers starting to treat themselves again
The forecast for year-on-year growth of 1.9% by value and 2.4% by volume for the sector is, though coming from a low base in 2023, indicative of consumers starting to treat themselves again as inflation drops.
BrandAlley’s chief executive Rob Feldmann also notes the treat yourself mentality of today’s consumers, saying: “Our customers are still shopping and they are seeking out the discounts. They are wanting the best products at the best prices and are more concerned with strong brand names, good pieces and good prices than they are with items being current season.”
Deflation in the cost of goods to retailers and a fall in operating and transport costs are likely to filter through to consumers from last year’s highly inflationary environment, which was another factor in the sector’s challenging festive period.
According to Retail Economics, a net 5% of consumers are planning to increase spending in this area as confidence for lower ticket items returns.
Luxury fashion brands are likely to continue to face tougher headwinds as more affluent households continue to face high mortgage costs, and house price adjustments impact the spending power of others.
The pre-loved market for fashion can also expect to see a boost – in 2023 second-hand platform site visits were up 8.2% according to data from Similarweb. Ebay saw 203.6m site visits in the UK during December 2023, up 1.54% year on year, but Vinted was the fastest-growing second-hand platform in the month, with visits up 104.18% year on year, to reach a total of 13.5m.
Ebay became the latest marketplace to ditch seller fees for fashion in the UK as of April 2024, following in the footsteps of Depop, which dropped its 10% seller fee in March, giving the platforms further appeal to eco-conscious shoppers.
Ruth Arber, head of fashion, retail and travel at Snap Inc, comments: "Shopping online has never been easier, yet many shoppers will abandon their carts if they're uncertain an item will fit them.
"On Snapchat, over 300 million Snapchatters engage with our AR experiences daily, which boosts purchase likelihood by 2.4 times. As a result, 85% of Snapchatters feel more confident in their purchases, versus 72% of non-Snapchatters.
"As the fashion industry navigates its recovery, leveraging more creative solutions powered by Snapchat’s AR tech will be crucial for retailers looking to capture consumer attention and drive impact during the festive season."
Health and beauty
Health and beauty is expected to be one of the strongest performers in the final quarter of 2024. Sales values are forecast to increase by 2.8% on last year, with volumes rising by 0.3% off the back of an expected 2.5% inflation level in the market.
Social media platforms such as TikTok will continue to disrupt the market, with this sector a particularly active space for challenger brands propelling themselves into consumer consciousness through new channels, says Retail Economics’ Richard Lim.
15% of consumers expect to spend more in this category in the lead up to Christmas, with people eager to treat family and loved ones with treats over functional gifts
According to Retail Economics, a net 15% of consumers expect to spend more in this category in the lead up to Christmas, with people eager to treat family and loved ones with treats over functional gifts.
Boots released its annual Beauty Trends report in April, which gives an indication of popular product ranges within the sector. Among the themes identified was that of brands taking a “gentler approach to beauty” through bio-engineered products harnessing the power of nature.
Mintel research shows “natural skincare” was the top claim on UK launches in the facial skincare category in 2023, in line with a growing number of Boots.com searches for the same term, as well as “sensitive skin”.
In response, Boots has re-launched its Natural Collection of 100 cosmetics products that are "made from 90% natural origin ingredients and fully recycled packaging", vegan and all priced £5 or under, which makes them well priced for stocking fillers.
“It’s an exciting time for innovation in the realm of natural beauty,” writes Jenna Whittingham-Ward, head of future beauty reinvention at Boots UK in the trends report. “We’ve seen a wealth of brands directly responding to the consumer demand for products that deliver the same levels of efficacy but accommodate for sensitivities, allergies, and a more mindful approach to what we’re applying to our skin.”
Boots reported sales growth of 5.9% for the quarter to 29 February. Christmas 2023 trading was particularly strong with sales up throughout December. Most popular products were the beauty and gifting categories.
Homewares
Homewares sales are expected to rise by around 2.5% in value year on year in the final quarter of 2024 – a marked improvement compared to 2023 when values dropped by 2.8%.
Volume growth is expected to reach 3.4% as retailers pass on cost savings to consumers driven by deflation in imported products, which could be a factor in encouraging sales for a sector that isn’t traditionally associated with a sales boom in Q4.
As ever, the success of this sector will be closely aligned with the health of the housing market, so the squeeze on housing affordability is set to undermine demand for big-ticket items. That said, in this environment there is always a cohort of consumers who will embrace an ‘improve, don’t move’ mentality, rejuvenating interiors with lower price point products such as cushions, soft furnishings, curtains and blinds.
The Cotswold Company could be one to watch in this sector. It ranked sixth in Retail Week’s Christmas league trading table 2023, with like-for-like sales increasing by 10.5% in 2023 compared to 2022. Investment in its showrooms was one of the reasons given for the growth, but investments online, where 80% of its sales are generated, helped reduce the bounce rate by 9% and increase conversions by 3%.
''Rather than trading down, customers are placing increasing value on how products are made and what it’s made from. Customers continue to prioritise the quality, durability, and longevity of their homewares over throwaway culture''
Its chief marketing officer Matt Pollington said: “Rather than trading down, customers are placing increasing value on how products are made, reinforced by our 15-year guarantee, and what it’s made from, reinforced by our FCA wood sourcing. And as we’ve seen over the past six months, customers continue to prioritise the quality, durability, and longevity of their homewares over throwaway culture.”
Reaffirming this narrative, whilst sales in homewares may be on the up for Q4, there’s optimism for the wider sector year-round, according to B&Q head of outdoor and seasonal Mairi Devlin. “We’ve seen a trend for decorations not just being for Christmas,” says Devlin. “For example, we’re seeing more outdoor seasonal lighting staying up all year round. Cluster lights have become a best seller as they add a twinkle and ambience to your garden (or inside your home) that does not need to be limited to the holiday season.”
B&Q research conducted between November 2023 and February 2024 suggests over half (57%) of customers now buy small decorative things for their homes every couple of months, with popular categories being seasonal home accessories such as cushions and candles. The research formed part of the retailer’s The Way We Live Now report, which took data from 48 in-depth UK home visits and surveys and interviews with 3,000 people.
Electricals
The electricals market has been challenged for a prolonged period and that looks set to continue in Q4 2024, although there will be a significant improvement on the 5.2% decline in the value of sales reported a year before.
Value growth is expected to decline by just 1.9% this time around, with sector inflation falling to around 1% following ongoing deflation of producer prices from China. This suggests volumes will decline by around 2.8%.
Retail Economics research shows a net 20% of consumers are expecting to cut back the amount they spend on electricals in 2024, which is the sharpest decline across all retail categories measured. There are also cyclical challenges with a lack of new generation games consoles and big releases on the horizon dampening growth.
Marks Electrical was a surprise winner in 2023, reporting 17.8% like-for-like sales growth in the three months to 31 December, which is attributed to tightly managed costs, maintained inventory levels throughout the period and a targeted brand awareness campaign. We can expect similar from the big names in the electricals sector this year as they tighten up strategies to cut costs and increase efficiencies.
The sector typically reports an annual Black Friday boost. This promotionally heavy period is not as impactful as it was in the early days of its arrival from the US around a decade ago, but there is still cautious optimism for the big sales days.
Last year, store footfall was down 1.6% across UK retail destinations compared to Black Friday 2022 according to MRI Software. Across the full Black Friday week, footfall was up 2% on 2022.
You can guarantee retailers won’t sleep on the opportunity in 2024 but will adapt their strategies – leveraging the categories and innovations set to make the biggest impact on sales values.
''To really cut through we have to be innovative. That’s why we’ve leant on Green Friday – it marries together both cost-effective and sustainable living, two of the main drivers behind spending decisions''
We can expect to see deals start earlier in the electricals sector, much like last year. For the first time in 2023, Currys joined the Green Friday movement and launched a pre-Black Friday event offering customer savings on 140 energy efficient kitchen appliances.
A spokesperson from Currys said: “Black Friday remains absolutely integral to us, but we know that it’s competitive out there and to really cut through we have to be innovative. That’s why we’ve leant on Green Friday this year – it marries together both cost-effective and sustainable living, two of the main drivers behind spending decisions in 2023.”
Currys saw an overall decline in like-for-like sales of -3% for 2023 versus 2022 for the 10 weeks to 6 January.
And much like Currys eco-promotions, we can expect to see electricals retailers pick and choose where they offer the best value, based on data-driven forecasting of customer need.
One area that communications retailer EE will focus on this festive season is gaming. Retail Director Asif Aziz said: “Last year, our customers showed an increased interest in new areas of technology, particularly gaming. We now offer interactive gaming zones in our latest stores”.
Launched in June 2023, EE’s new retail concept stores allow people to try out the latest gaming launches, from racing car rigs to multiplayer games, before deciding to make a purchase. The investment in these spaces won the retailer the Best New Store category at the Retail Week awards 2024 for its flagship store in Westfield, White City.
Toys and games
Toys and games sales by value are expected to rise by around 2.1% year on year in Q4 2024, as a recovery in spending power helps support growth in this area. Lower consumer prices compared with 2023 will likely filter through to consumers as import deflation is passed on, hence why the growth is half of that experienced one year ago.
Based on these factors, volume growth is expected to be in the region of 2.6%, with the market a defensible part of spending during the festive period as consumer spending power sees a modest recovery and parents prioritise gifting for children.
Kidults (12+) in Europe spent £1bn more on toys and games for themselves last year
With no new consoles forecast for release this peak period, toys are expected to win out on Christmas lists. And the ‘kidult’ market is expected to remain prevalent; according to data from market research firm Circana, kidults (12+) in Europe spent £1bn more on toys and games for themselves last year.
The toy market remains incredibly competitive and driven by innovation from global brands, which means we should see spending concentrated across fewer retailers, which will come at the expense of independents.
Last year saw Toys R Us return to physical retailing after the ecommerce website reopened the previous year, following the business's collapse into administration in 2018. The retailer opened nine initial ‘store-in-store' spaces within WHSmith branches and has committed to a further 30 to be opened in time for the peak Christmas 2024 season. The rollout of Toys R Us to more locations is part of WHSmith’s emphasis on highly disciplined space management to maximise returns.
Online, The Very Group credited ‘strong’ Christmas trading to toys, gifts and beauty, following like-for-like sales growth of 3.4% in the seven weeks to 22 December 2023, versus the same period in 2022. Its toys, gifting and beauty revenue jumped 8.8%.
The world’s largest retailer, Amazon, reported sales of $170bn (£133.3bn) in the three months to December, up 14% on the same period in 2022. Amazon remains a go-to location for shoppers buying toys and games all year round, but especially at Christmas.
Furniture and flooring
The furniture and flooring sector looks set to be the worst-performing category this golden quarter, with difficulties owing to the high cost of products, a challenging housing market and consumer caution to spend on big-ticket purchases prevailing.
Last year brands such as Ikea focused on price cuts across the board – tactics we can expect to see replicated this year amid another challenging environment
This will make for a second difficult Christmas for the sector: sofa giant DFS reported gross sales down 5.6% year on year over the second half of 2023, and brands such as Ikea focused on price cuts across the board – tactics we can expect to see replicated this year amidst another challenging environment.
Where Black Friday month usually sees success for furniture retailers, trends akin to last year are forecast again in 2024, with furniture and flooring being lower on priority lists even when bargains abound.
We therefore expect sales values for furniture and flooring in Q4 to fall by 3.6% year on year, on top of the 3.1% decline in 2023.
While at the start of the year there was optimism that supply chain issues experienced over the last couple of years following the pandemic had been on the mend, which would help availability of products, it might not be all plain sailing in the run up to Christmas. Supply chain disruption in the Red Sea is dragging into its eighth month and shipping costs have rocketed in the past few weeks, causing trepidation among retailers, particularly those selling furniture, homewares and white goods.
Due to this disruption, sales volumes are expected to dip by 1.8% year on year.
DIY and gardening
While the DIY and gardening sector is likely to remain under pressure in the final three months of the year, inflation of 1.9% in the sector looks set to help sales values push up by 1% compared to 2023, when the sector experienced declines of 5.3%.
Volumes are likely to fall on the previous year by around 0.9%, and this comes after large players in the market, such as Kingfisher, released challenging results in recent trading periods, including some warning on profits.
Last year, some big names experienced a disappointing festive period, including Topps Tiles which reported a 7.1% decline in like-for-like sales in the quarter to 30 December, versus the same time period in 2022.
Challenges weren’t universal across the board for Christmas 2023. Homebase’s chief executive Damian McGloughlin described “bumper Christmas sales” when talking to Retail Week in February. Broadly speaking, however, the retailer reported heavy annual losses – reflecting trends seen in the sector. In its full year results to January 2023, it recorded a £84.2m loss from a profit of £30m the year before, but says it’s on track to deliver double-digital profits in 2024.
The Horticultural Trades Association reported Christmas sales across garden centers to be down 7% for December 2023, versus 2022, as measured by the HTA Garden Retail Monitor. Consumers bought items such as Christmas trees earlier last year, with a 7% rise in real tree sales in November 2023 year on year.
The association commented on the competition presented over Q4 2023 by discount retailers selling artificial trees, lights and decorations, which may have taken market share in the tough economic climate. While not solely down to sales of Christmas items, both B&M and Poundland reported like-for-like sales growth over the festive quarter 2023 (B&M 5% growth year on year to 23 December; Poundland 0.9% growth to 31 December).
Once again this year, a weaker housing market, interest rates remaining at peak level, and a lower level of housing transactions could undermine demand across the industry for big DIY and garden projects, although – like homewares – the improve, not move trend will counteract some of these pressures as homeowners take on smaller projects to freshen up their homes, as they enter a new cycle of improvements following the pandemic bump four years ago.
Like Charles Dickens’ character Scrooge in A Christmas Carol, retailers taking a look at Christmases past can help shape their Christmas to come – and last year provides some hints about how to prepare for 2024.
Agile supply chain planning
It was not so long ago that the peak period would be accompanied by a host of delivery problems, with many retailers unable to fulfil orders around Black Friday because of capacity constraints and website outages.
However, spreading out deals and marketing messages throughout November has helped put retailers more in control – and it has enabled better analysis of their customers.
As Gary Page, general manager for customer delivery and collection operations at John Lewis Partnership, says: “When we get into peak planning, one of the biggest challenges is [understanding] how our customers are going to shop with us this year, and where do we need that capacity.”
Constant analysis of trading patterns allows retailers to shape their proposition accordingly and those retailers that can actively influence consumer behaviour are in a strong position.
''If we look at click-and-collect and home delivery, that balance has changed hugely over the past few years. Click-and-collect is now having a resurgence''
“If we look at click-and-collect and home delivery, that balance [of what a customer selects at peak] has changed hugely over the past few years,” explains Page, who was talking at The Delivery Conference in London in February. “It was roughly about half and half pre-Covid, then [click-and-collect] dropped right down, then having come out of Covid it’s rebounded quite quickly.”
Page suggests JLP has to “second guess” what was going to happen, and revealed click-and-collect dropped off at peak as more people chose home delivery, opting for convenience. Now, he adds, click-and-collect is “having a resurgence”, partly because the deployment of locker networks is making it “increasingly more attractive” to shoppers who want control.
John Lewis has doubled down on click-and-collect and sets this option as the default on its website as it tries to influence people to favour this delivery route for the cost saving benefits it brings the business.
Whilst JLP and others are spreading their marketing throughout November, for pureplays this messaging often comes even sooner. Flash sale site BrandAlley launches Christmas products from August – including wreaths, decorations and Christmas trees. With the majority of lines sold through within two months, the brand starts its discounting push in October, with November and December taking a gifting focus.
Talking about supply chain planning, BrandAlley boss Feldmann says: “Our customer is very driven by next-day delivery, particularly in the run up to Christmas, so we have strategically made the investment into buys for quick fulfilment to maximise on being able to fulfil next day. Last year, as we moved from third-party logistics to our own warehouse, we were able to deliver next day to our customers, which meant we saw a significant uplift on the prior year."
Last year BrandAlley purchased the intellectual property, logistics operation and customer service division of ecommerce business Internet Fusion Group, as part of expansion plans that marked a “significant strategic opportunity” to enhance its infrastructure, rendering its operations more cost effective.
Fortnum & Mason ships all over the world, particularly at Christmas time, when its products are in demand
Fortnum & Mason ships all over the world, particularly at Christmas time, when its products are in demand
Premium department store Fortnum & Mason experienced a 17% year-on-year hike in sales in the five weeks to 24 December, 2023, which prompted some operational investment for this year.
Speaking about last year’s peak period, CEO Tom Athron said: “As many retailers experienced over Christmas, the significant spike of late seasonal demand tested our infrastructure to the limit.”
As a result, the retailer has consolidated its distribution centres into a single 400,000 sq ft warehouse space in Northants, with the aim of providing reliable service and the ultimate customer experience for this coming peak.
Liberty is also taking action to prepare. Store director Julian Beer says: “While we anticipate challenges typical of the festive season, such as heightened competition and logistical demands, we're confident in our ability to mitigate them. By implementing robust operational strategies, we're prepared to navigate any challenges that may arise during the festive season.”
As of the time of writing, freight rates are beginning to increase as is demand on container ships, which will become especially impactful for those retailers reliant on overseas shipping that used to travel through the Red Sea, if disruption there continues into the later part of the year.
Every day that the issues continue, the likelihood of customers having to pay more at the tills over the festive period increases – making retailers in the UK, and around the world, increasingly nervous.
Own-brand product
Own-brand ranges took centre stage last Christmas and played a key role in driving growth for retailers across categories including food and beauty.
Boots relaunched its Natural Collection in time for this year's Golden Quarter - hitting two customer desires with value price point and natural product
Boots relaunched its Natural Collection in time for this year's Golden Quarter - hitting two customer desires with value price point and natural product
Following in the footsteps of the successful performance of Aldi and Lidl’s premium own-brand ranges at Christmas, Asda launched Exceptional by Asda in May to “elevate” its premium-tier offer. With 500 new products across multiple categories set to be on the shelves in the coming months, it will be well established by the festive quarter.
WHSmith announced its first own-brand food-to-go range in May, too, Smith’s Family Kitchen, initially launched in UK travel stores. Consumer demand and feedback have been pivotal to the launch – with over 1,000 shoppers consulted on the branding, design and packaging and vegetarian and vegan options added. A Christmas specific range could very well be a winner for the brand.
Beauty budget own-brand ranges outperformed in a space that has historically been brand-led, especially at peak period. Boots’ No7 and Superdrug’s Studio London became the highest-performing ranges at these companies, respectively as consumers sought cost-effective goods in a saturated market.
Much of this can probably be attributed to rising inflation at the time, but as we highlighted in the previous chapter about Boots’ re-launched Natural Collection, own-brand has carved a new space for itself at peak trading and the trend could continue.
New pricing mechanics
A theme in 2024 – starting in January, potentially even before many consumers had taken their decorations down – was price cutting, and that will continue to be a tool in many retailers’ armoury going into peak period.
January saw Ikea, Matalan and Asda join a growing list of retailers to launch new price-reduction campaigns. All the major supermarkets offer price-matching schemes, but Asda was the first to target both Lidl and Aldi at the same time, price matching whichever is cheaper. Morrisons quickly followed suit.
Sainsbury’s and Tesco have doubled down on their Aldi price matches, both expanding the number of products in their schemes. M&S has unveiled an array of price cuts as part of its ‘trusted value promise’ for 2024, including extending price locks and lowering prices on scores of items.
The campaign came as the retailer ditched its membership pricing scheme trial, with boss Stuart Machin saying that “dropped and locked” prices and dedicated value ranges (that don’t require loyalty membership) give customers confidence in price integrity.
Machin also says he does not expect price increases in clothing this year. This view was concurred by Next boss Lord Wolfson, with the most recent Next trading statement suggesting an element of deflation.
Prioritising payments
As economic conditions ease a little and consumers start to feel more confident about their spending, Lloyds Bank encourages retailers to focus on reviewing their payment strategy now, ahead of the golden quarter. Clacken says: “There’s great insight found in transactional data, for example, if you know a high proportion of visits to your ecommerce site are via mobile, enabling Apple or Android Pay for fuss-free, simple, one click check out on the move is a must.”
One in four shoppers said they would be likely to use buy now pay later (BNPL) to help spread the cost of festive spending, according to a survey conducted by Citizens Advice in November 2023 – and we can expect this number to be similar for Q4 2024.
And retailers are taking note – BrandAlley’s Feldmann says he anticipates customers “will start thinking about how they can spread their spending” as they “continue to be price sensitive”. BrandAlley offers delayed payment services through Clearpay, allowing UK customers a fixed amount of interest-free credit to make purchases, paying it back over four automatic installments, two weeks apart.
Klarna works with 15,000 retailers in the UK
Klarna works with 15,000 retailers in the UK
In fact, partnerships are big in this space. Boots became the latest retailer of many to partner with third party BNPL provider Klarna, when it rolled out the payment option across its app and website in March.
Boosting shopper savings further, Klarna’s AI-powered ‘shopping lens’ allows customers to photograph products in real life, finding the best deal on the Klana app.
BNPL isn’t the only way retailers can support finance-focused shoppers – flexibility and convenience are key. From offering varied payments options, to flexible returns in the form of refund, store credit or exchange only, and the length of time allowed for returns/exchanges after the festive period – it all has a significant impact on a customer's propensity to purchase at a time when competition for spend is high.
“Digital wallets such as Apple Pay and Google Pay are now the third most popular payment method in the UK behind physical card and contactless card payments,” adds Lloyds Bank’s Rebecca Clacken.
“It is essential that retailers focus on providing the payment methods their target audiences prefer and ensure they are as friction-free as possible. Our recent report in partnership with FT Longitude found 59% of senior business leaders surveyed agreed that providing customers with a good checkout experience is as important to competitive advantage as offering the best products.”
Loyalty-led pricing
Tecso and Sainsbury’s have led a charge into membership pricing in recent years, seeing this as a way to encourage shoppers into their ecosystem.
It’s a strategy that’s working for them. Sainsbury’s reported year-on-year growth of 3.4% to £36.4bn in group sales for the year to 31 March, 2024, with chief executive Simon Roberts citing the value of loyalty to its customers: “Nectar Prices has been a game-changer for customers, saving them £12 on a typical £80 shop.”
Tesco has also seen success through its Clubcard Prices scheme, helping it to maintain its top market share position in the grocery space. Tesco now has 8,000 products on Clubcard Price discounts, with the number of households using the scheme reaching 22m.
Membership pricing is growing outside of grocery – and generating good results.
The Fragrance Shop said in January that its subscription programme MyTFS “experienced a remarkable increase in memberships sold, underscoring its position as the smartest way to shop, with close to 1m members at the end of December”. MyTFS enables consumers to select one of three different tiers of membership – the higher the annual fee paid, the more perks and discounts the customer receives – and the retailer said it played an important role in the retailer’s success over the last festive period.
Courtney Rogers, founder of CIJ Group, a PR solutions company which runs the annual Big Christmas Press Show in London, says she expects to see more of this type of activity in the build-up to Christmas 2024.
She cites John Lewis, through its free to join MyJohnLewis scheme, as an example of a retailer focused on this during peak. Perks include personalised offers, in-store treats, early access to new launches, and members-only events and money back for recycling old clothes or beauty products through John Lewis.
There’ll be a lot of focus on more evergreen deals – even as Black Friday has past and one deal is finished, they’ll give customers another one
“There’ll be a lot of focus on more evergreen deals – even as Black Friday has past and one deal is finished, they’ll give customers another one,” she says. “MyJohnLewis often does a promotion saying if you return to the store you can have another £10 off a purchase. It’s all about saying ‘they’ve made one purchase but how do we drive the next one', and so on, so there’s always that momentum building.”
Broadly speaking, "It’s clear that consumer behaviour is evolving when it comes to loyalty,” says Marigold’s Georgia Gkolfinopoulou. ”And with it, so do marketing tactics that allow us to provide more human experiences, more personalisation, more relevance and more timeliness.
"Consumers have developed a taste for these personalised experiences and they are rewarding brands that recognise their loyalty. In the run-up to Christmas, customer loyalty becomes a major differentiator in the relationship between consumers and brands."
Marketing messaging
IMRG data on the types of Black Friday deals most often run by retailers shows that discounts using the phrasing “selected products up to” a certain price is the go-to lever retailers are leveraging to encourage shoppers to purchase. It dipped slightly (to 43% of retailers using this tactic) in 2023 but is by far and away the most regular marketing technique at this time of year.
Rogers says that although Christmas PR campaign preparation and product sampling comes a lot later in the year than it used to, she expects Black Friday sales periods to continue to elongate and run through November.
She describes it as “maximising the opportunity”. “Whereas it used to be more secretive, it’s now about publicising the offers more in advance so consumers know what to expect.”
Throughout the festive period, consumers are most likely to engage with messages containing “discounts and coupon codes, loyalty programme promotions, sale/holiday promotions and offers”. All the above present great opportunities for personalisation and individualisation on a customer level, according to Gkolfinopoulou.
”Therefore, robust customer journey mapping is crucial. Different stages in the customer journey require unique offers and content to be truly compelling.
"Instead of sending out promotions to everyone, retailers should identify the different stages in their customers’ journeys and develop appealing offers and sequences for each stage," Gkolfinopoulou advises. "This may require more effort initially, but it will help reduce the frustration that arises from irrelevant content and offers, which more than half of consumers experience.”
Pandora's Loves, Unboxed art installation Christmas 2023 campaign
Pandora's Loves, Unboxed art installation Christmas 2023 campaign
Pandora’s Sonia López-Delgado reveals that the jewellery retailer’s paid media focus in peak is on “driving long-term brand desire and increasing awareness” of range, material and design aesthetics”. “For instance, our lab-grown diamonds will receive significant attention during Q4, along with our new Pandora Essence collection that launched in May,” she says.
“We are engaging customers with activities across multiple touchpoints that invite them to meaningfully connect with the brand, as well as working with influential content creators and celebrity faces, such as Pamela Anderson, to inspire our audiences with ways to wear and style Pandora in their own way.”
Last year for its Christmas marketing activity, Pandora ran ‘Loves, Unboxed’, a campaign centred around the emotional moment of opening a Pandora gift box. It included an experiential activation in central London for which five artists created ‘what love means to them’ installations and the public could also contribute designs and messages displayed on outdoor screens. Pandora says the plan is to build on this in 2024 via the ‘Be Love’ campaign, which launched in January.
Social stays strong
Retailers can’t overlook the influential effect of social media this Christmas.
Recent research conducted by Retail Week in March shows social media to be the second most influential platform for consumers looking for shopping inspiration, bar direct browsing on a retailer or marketplace website. For the youngest consumers, where they choose to scroll has an even bigger impact: 58% of 18 to 24 year olds take shopping inspiration from TikTok, and 49% of 25 to 34 year olds are swayed by what they see on Instagram. Meanwhile, Snap Inc says "the Snapchat generation" holds over $4.4trn (£3.5trn) in spending power globally.
And retailers are already taking note. According to TikTok research, 98% of the top 50 UK retailers are active advertisers on the platform – and the adoption of social platforms to attract consumers is only set to grow into the festive period.
Waterstones stores around the country have been promoting the BookTok trend. Watestones on X
Waterstones stores around the country have been promoting the BookTok trend. Watestones on X
Waterstones’ head of online operations Kieron Smith welcomes the trend for people “getting excited about books on social media”, or ‘BookTok’ as it has been labelled. He calls it “a refreshing thing” for such a traditional retail category. Waterstones has 4.2m likes on TikTok, and leverage the #BookTok trend, which has 126bn views, and over 19m posts to date.
While trends on BookTok can be quick to change, Waterstones group augment this approach with more traditional sales tactics, each trying to create increased demand. Although not a big Black Friday discount player, Blackwells for example – an academic books retailer owned by Waterstones – is expecting to repeat its Black Friday actions of recent years when it offers a deal an hour for 12 hours. The initiative is marketed to its best customers and creates “some excitement” online at a time people are keen to spend money without going heavy on the markdowns like retailers in other sectors, according to Smith.
Other rands currently leveraging TikTok and seeing success include Lidl, Burberry, M&S and Asos, to name a few, and we can only expect engagement across socials to ramp up in the build to peak.
Snap Inc's Arber says: "Consumer mindset is so often overlooked, yet absolutely vital for marketing success. When consumers are happier, they're more receptive to ads, creating an ideal environment for connecting with customers.
"Snapchat is ranked the number-one happiest platform and 71% of daily UK users say Snapchat is where they don't feel the pressure of social media, versus 54% on other platforms.
"As the Snapchat generation holds over $4.4trn in spending power globally, Snapchat is a positive, brand-safe environment for clients who want to drive engagement, boost purchase intent and sales, and truly stand out this festive season."
How 5 UK retailers plan to win Christmas
We have looked at the economist’s forecasts, but how are individual retailers preparing? Retail Week spoke to a group of UK retailers to find out how they are planning for the 2024 golden quarter and where their focus lies for what is typically their busiest trading period of the year.
Pandora
Pandora is working towards having a sizeable portion of its stores refitted with its Evoke 2.0 design concept, which was officially unveiled in its London Oxford Street store in August 2023, following tests concepts in Milan, Italy and China.
Some 40 of the retailer’s 234 UK stores are expected to have adopted this format by the fourth quarter of this year, representing a speedy roll-out of what UK & Ireland marketing director Sarah Chenery described as “warm, welcoming and playful” spaces that are more feminine and feature a wider array of products that can be engraved to offer a more personalised service.
Key high footfall Pandora locations such as London’s West End, Glasgow’s Buchanan Galleries, Manchester’s Trafford Centre and Liverpool One will feature the new design concept by this Christmas, while UK and Ireland general manager Sonia López-Delgado has promised Q4 will see the “highest investment of the year in terms of both creative elements and look-and-feel”.
''We are focusing on wellbeing during this busy period for retail workers. We will again send wellbeing boxes filled with goodies and fun activities to stores to support our teams''
Investment in staff and technology for the golden quarter is already being considered by Pandora, with more mobile point of sale systems set to be a key feature, allowing shop staff to manage what she calls the “iconic Pandora Christmas queues”. The plan is for 1,000 temporary staff to join the retailer during the peak period, each of whom will receive two days’ training before stepping on to the shop floor.
“This investment benefits both the employees and Pandora, enhancing overall value,” adds López-Delgado. “We are also focusing on wellbeing during this busy period for retail workers. Following last year’s initiative, we will again send wellbeing boxes filled with goodies and fun activities to every store to support our teams through the festive season.”
López-Delgado feels confident in understanding which products will be in demand for the jeweller’s busiest trading period, with the trend for gold pieces “growing year on year”. She adds that blue stones typically sell well for Christmas, and rings and necklaces inspired by snowflakes and ice “are always popular”. “We have new designs coming out this year to satisfy that demand,” López-Delgado says.
She also suggests the Pandora lab-grown diamonds collection is being received very well by customers, hinting at growing demand for more sustainable jewellery.
In light of the economic landscape, Pandora says it has “worked very hard” to offer a wide price range to appeal to as wide a range of budgets as possible – from a £25 charm “full of meaning” to a £1,300 diamond ring “for customers who want a special treat”.
B&Q
With the forecasts for home improvement and DIY looking less than festive for this golden quarter, how is B&Q planning to see success in peak?
“Our peak sales period typically falls in and around Easter, when both indoor and outdoor home improvement projects are popular. At Christmas, we therefore focus on trees, lighting and home accessories to help our customers decorate every nook and cranny of their home, including their outdoor spaces,” says head of outdoor and seasonal Mairi Devlin.
This year Kingfisher-owned B&Q is launching two new decor concepts, yet to be announced, and also bringing back two popular themes from 2023 – ‘refined classics’ (reds, greens and golds) and ‘layered greens’ (a more natural aesthetic).
''Decorating homes with more than one tree is a growing trend, and in 2023 the maximalist trend for large outdoor decorations was booming''
“The growing trend over the past few years has been to decorate homes with more than one tree, and we expect this to continue,” Devlin says. “In 2023 we also saw a big growth of the maximalist trend with our large outdoor decorations booming – from lit-up reindeers to giant inflatable polar bear becoming popular with our customer base.”
B&Q’s total sales edged up 0.4% to £3,849m in 2023 (to 31 January, 2024) with ecommerce sales growing 21.5% driven by the strong growth of its marketplace, which launched in 2022 and features 1.2 million products from over 1,100 verified sellers. Marketplaces sales accounted for 38% of B&Q's total ecommerce sales in 2023.
Retail Navigator forecasts B&Q sales to fall in 2024, with growth then established from 2025 in the low single digits, reaching £4,120m by 2028. Online is expected to rise to 19.6% of overall turnover based on the continued opportunities its marketplace presents, which will inevitably support Christmas trade.
Liberty
Department store Liberty is a popular tourist destination at Christmas, and store director Julian Beer says it is crucial to prioritise creating that magical experience ahead of the busy fourth quarter.
“We understand that Christmas shopping is not just about purchasing gifts but also about creating memorable moments with loved ones,” he explains.
Without revealing specifics for this year’s theme, he says that the London West End store will provide something unique from previous Christmases. “This year, our theme transcends the walls of our London-based store for a truly immersive experience, unlike anything we have done before.”
Liberty also encourages people to treat themselves to gifts and Christmas experiences. In the past it has run wreath-making sessions and sock monogramming services. Beer’s expectation is that this type of activity will be popular once again in 2024.
''Demand for unique, artisanal offerings and products that incorporate our iconic Liberty prints last year has influenced our strategy for Christmas 2024. We are prioritising the curation of own-brand product, as well as exclusive offerings from niche creators''
Last year there was demand for “unique, artisanal offerings as well as products that incorporate our iconic Liberty prints,” according to Beer. “This insight has influenced our strategy for Christmas 2024, as we continue to prioritise the curation of own-brand product, as well as exclusive offerings from niche creators,” he explains.
“Additionally, we're expanding our range of experiential offerings and enhancing our in-store experiences to cater to evolving consumer preferences. By staying attuned to emerging trends and adapting our strategy accordingly, we aim to lead on customer experience and deliver a truly memorable Christmas.”
In its most recent financial annual update, Liberty reported that revenues jumped 41.6% to £116.2m in 2022 (to end-January 2023). With total sales moving 25% ahead of pre-pandemic levels in 2022, following a sharp recovery, Retail Navigator envisages that Liberty sales will come in around £145m by 2027, with the online business accounting for around 45%.
Waterstones
Waterstones’ head of online operations Kieron Smith predicts this Christmas period is going to be defined by “trust” and “human values”, despite the narrative around the rise of AI and the industry’s increasing willingness to invest in it with the perception it will boost efficiency.
“The best interaction for us is to sell a book to someone and have them come back and tell us what they thought of it and then make other recommendations. Good bookselling, especially in fiction, is about helping people find things they wouldn’t necessarily have picked themselves or merchandising it in a way that means they pick something up that is serendipitous.”
Smith, who’s wide-ranging group role involves him overseeing digital strategy for Waterstones brands Blackwells and Wordery as well as leading online operations for Waterstones, Foyles and Hatchards, has multiple customers to serve on several different platforms over Christmas.
He says a key project he is overseeing – and one he expects will be in place by Q4, which is the group’s busiest trading period of the year – is making its online book search functionality more akin to the service customers receive in stores.
He describes online bookselling as having been “too structural” in the past and wants to create a “more dynamic” navigation whereby customers are taken into “rabbit holes” of more interesting book choices from product detail pages or on-site search.
“Working with data from publishers and not AI, we’d love to get this up before Christmas so customers can dig around, rummage and find fantastic books for people – it’s definitely an active project at the moment.”
Waterstones reported a 13% surge in sales from £399.9m in 2022 to £452.4m in 2023, helped by the acquisition of Blackwell’s in August 2022.
Retail Navigator forecasts UK sales of nearly £550m by 2027, with the online business set to generate around 30.6% of the total.
The Cotswold Company
Boosting shoppers' Christmas spirit by offering impeccable customer experiences is top of mind for chief marketing office Matt Pollington and his team at The Cotswold Company.
“Our ever-present goal is to ensure our customer has the best possible experience reflected in our market-leading net promoter score and excellent-rated Trustpilot scores,” says Pollington. The retailer has a Trustpilot score of 4.5 out of 5 at the time of writing with more than 22,000 reviews.
To do this, the retailer says it’s in golden quarter preparation mode already. Fulfilment is a significant part of the customer journey when it comes to homewares and furniture and The Cotswold Company has developed a bespoke training centre for delivery colleagues, which uses room set-ups that reflect people’s homes, including a staircase, so they can practise getting large pieces inside without causing any damage.
The Cotswold Company’s like-for-like sales in the nine weeks to December 31 increased 10.5% in 2023 versus 2022. Online accounts for 80% of sales, and the company saw a 9% reduction in bounce rate and 3% increase in conversions over the period. Chief executive Ralph Tucker attributed this success to its delivery service and to optimisation of the online user experience.
''Entertaining is top of mind for The Cotswold Company customers and we’re preparing for this by extending our express upholstery range with more colour and style options, which we make available for delivery up until Christmas week itself''
Product offering is a key way the brand helps customers get ahead. “Entertaining is top of mind for The Cotswold Company customers, for whom the dining room has become the heart of the home, and the months leading up to the Christmas holidays are typically full of preparation.
“Welcoming friends typically means hosting, and we’re preparing for this by extending our express upholstery range with more colour and style options, which we make available for delivery up until Christmas week itself, in addition to our extensive bedroom ranges including the ever-practical sofa bed options."
So, what should retailers think about in the build-up to this peak period, and what should they prioritise to maximise returns from the golden quarter? Here are the five key takeaways from our Christmas Forecast...
Pricing and deals will be key
Consumer spending power will be bolstered in 2024 compared to peak period in 2023 but market conditions are set to remain challenging. Therefore, there is a real opportunity to show empathy with what consumers are going through by keeping a good range of pricing across key Christmas lines.
Customers who feel they are getting good deals often treat themselves to little luxuries, which can really help augment basket size. Liberty anticipates shoppers will continue to treat themselves with their own purchases and Christmas experiences this year, for example.
Get on top of marketing early
Retailers always need to build in capacity for unexpected demand during peak, but consumer behaviour is often difficult to predict. Spreading marketing messages throughout November for Black Friday campaigns and nudging consumers to some of the most cost-effective methods of fulfilment from a business perspective can help retailers retain control during intensive trading. BrandAlley is just one retailer among many to start targeted promotions ahead of the golden quarter.
Embrace trends
Retailers that can flex and experiment with additional categories should look at the expected growth areas for Q4, such as food and drink and health and beauty, to see if they can boost revenue on top of core ranges by providing a brand-relevant offering in these markets. Expanding ranges that typically perform well at Christmas into year-round lines, following customer trends, is also an easy win. B&Q’s renewed focus on lighting and decorations is a prime example here, with the research showing that over half of all consumers will buy small décor items every couple of months, not just during the festive season.
Let own-brand lead the way
Own brand ranges took center stage last Christmas, and played an instrumental role in driving growth for retailers across categories. Even as inflation continues to inch down, cash-strapped consumers will continue to prioritise value and retailers should give high-margin, own-brand ranges enough headroom for growth this golden quarter. Boots' No7 range proved hugely successful last year, as did Aldi and Lidl’s premium own-brand food offerings.
CX needs to stand out
Focusing on customer experience and some of the magic of Christmas goes a long way. Retailers need to be operationally sound, of course, but sprinkling in some festive experiences such as special events and adding some colour and razzmatazz to shops will draw in consumers still scarred from the global news doom cycle of recent years. There are so many ways retailers and brands can bring an element of much-needed joy to their shoppers, such as Pandora’s focus on its new Evoke 2.0 store concept.
Partner viewpoints
Rebecca Clacken, director of merchant card payments, Lloyds Bank
While economic conditions have improved and consumer spending power has grown, competition remains high. For retailers looking to optimise sales in the golden quarter, preparation will be key. Consumers have higher expectations when paying for goods and services, where a bad experience could cause them to drop from the payment journey and not come back altogether. Our top tip to ensure a seamless payment experience at Christmas is to undertake an audit across all channels. Ask yourself:
- Do I have the payment methods that appeal to my target audiences?
- How easy is it for customers to transact both when paying and receiving a refund?
- What improvements can I make?
- Can I unlock more value out of my payments provider?
- Can an embedded finance solution be beneficial for my market?
One way we help our clients is through our unique insight into the spending habits of the nation. Lloyds Bank’s 26 million customers regularly make transactions via debit and credit cards, direct debits and other payment methods, spending on grocery shopping, eating out, paying bills, hobbies and more.
As a result, we have access to one of the largest and richest datasets in the UK. We can then use this data to provide businesses with anonymised and aggregated insights into consumer behaviour – not only from a macro-level perspective but also with an acute and granular focus.
Georgia Gkolfinopoulou, marketing strategist, Marigold
The retail buyer journey has undergone a radical transformation in recent years. We live in an age of choice, where consumers have access to a wide array of products and services and can identify a good customer experience both in-store and online.
Although price is a key consideration when purchasing, 44% of European customers indicate that a good experience is more important than price despite the overall pessimism about the economic outlook.
Personalisation is crucial to providing a good customer experience: 84% of European consumers favour brands that treat them as individuals, and personalisation matters to brands, too, as it can positively impact engagement, retention and conversion rates.
Retailers could use personalised communications throughout the peak season in numerous ways, including product recommendations, information about the closest location to increase foot traffic, or exclusive offers based on loyalty status.
Analysing last year's consumer behaviour from both an engagement and a transactional standpoint will help retailers understand when engagement peaked and the effectiveness of different messaging channels, such as email, push or SMS.
Additionally, studying the timeline of responses leading up to big sales and events such as Black Friday and Christmas will reveal how and when customers choose to engage with a brand.
The consumer landscape constantly changes and microeconomic factors may influence consumer spending behaviour this year. However, retailers have a great opportunity to create a testing plan today to study the impact of personalisation and innovative communications across different channels in their digital marketing.
This will help prioritise the most effective strategies during the peak season and introduce new and refreshed ideas to combat consumer fatigue and mitigate disengagement.
Bridget Lea, vice president and general manager UK, Snap Inc
Standing out at this time of year isn’t easy but retailers can drive significant impact this festive season from the power of real friendships that already exist on Snapchat. With 21 million monthly users in the UK, reaching over 75% of 13-to-34-year-olds, Snapchat isn’t just a platform, it’s a place an engaged generation of shoppers relies on for making informed purchasing decisions.
To maximize cut-through and drive strong results this festive season:
Capture early intent
Consumer behavior during peak season can be unpredictable, so capturing early intent is crucial. On Snapchat we begin to see users adding wishlist items to their carts two weeks pre-Black Friday, so launch festive campaigns early to capture attention.
Interactive and immersive experiences
Consumers are increasingly drawn to interactive and creative content. Leveraging this trend, particularly on platforms like Snapchat where 70% of users engage with AR daily, can significantly enhance engagement and drive purchase intent. Shoppable lenses on Snapchat drive a 2.4 times higher purchase likelihood and contribute to a 14% increase in incremental sales compared to video ads alone.
Positive user mindset
Consumers are inundated with ad campaigns during the peak season, so it’s crucial they see yours in the right mindset. Ranked as the happiest platform, Snapchat offers an ideal environment for advertising with over 90% of Snapchatters reporting they feel happy when they use the app. Advertisers should be leveraging creative and engaging opportunities to meet shoppers in a positive, brand-safe environment, transforming casual browsers into confident buyers.
Measurable impact and ROI
And of course, beyond media, ensure your activity is measurable with conversion API to inform future strategies and optimize results. Advertisers with CAPI activated on Snapchat on average see a 22% increase in attributed purchases and an 18% improvement in cost per purchase.
The Christmas Forecast was produced by
Rebecca Taylor
Commercial content manager
Stephen Eddie
Managing editor
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Production editor
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