The inside scoop
Field management company, FMI, interviewed 100 store managers on their Christmas best-sellers for ShelfLife. Fionnuala Carolan reports.
Print19 November 2010
Everyone is hoping that this Christmas will change or at least improve their fortunes but retailers are erring on the side of caution and being very modest with their predictions. Mixed reports are surfacing about what we can expect from this Christmas season. According to the annual Deloitte consumer survey Irish consumers will spend on average 10.6% less this Christmas. The reduction in spending is considerably more than the European average of 2.5%. However Ireland remains in second place in the European spending table behind Luxembourg despite having reduced by over 30% since 2008. The average spend per household in Ireland this Christmas will be €1,020 still significantly higher than the average European spend of €590.
The Deloitte survey, which was carried out online in the last two weeks of September, predicted that the average household will spend €250 extra on food this Christmas, 7.5% less than usual.
Commenting on the figures, Susan Birrell, consumer business partner for Deloitte said: “While the Christmas spend in Ireland is still high compared to many of our European counterparts, Irish consumers are becoming increasingly prudent in their spending patterns. What’s more, with what promises to be a very tough Budget looming in December, Irish consumers are likely to become more cautious in their spending during the festive season.”
Irish consumers are also due to finance their Christmas purchases differently with 46% indicating they will pay more by cash and 42% indicating that they are using loyalty points more often which should encourage retailers to promote their loyalty programmes.
Birrell said that the survey emphasised the importance that retailers will need to place on their strategy this festive season and that consumers will be seeking out best prices and special offers.
Over 40% of consumers are intent on spening more on the internet this year. The main reasons identified for shopping online were lower prices than traditional stores (79%), the convenience of home delivery (70%) and to avoid crowded stores (63%).
And nearly two thirds of respondents said that their spending power has lessened over the last 12 months. Despite this some shoppers intend to use the festive season to forget their economic woes.
Results from the Consumer Market Monitor released jointly by the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland (MII) project overall consumer spending for 2010 to decline by just 1%. With a 10% drop in overall spending for 2009 this suggests that consumer spending could be stabilising. If this is true Q4 of 2010 could give retailers that much needed boost to end the year on a positive note.
FMI speak to retail managers
The research by FMI for ShelfLife was carried out on managers in the following stores: Centra, Dunnes, Spar, SuperValu, Tesco, Eurospar, Londis, Mace, Costcutter, Independents, Aldi, Lidl and Superquinn stores.
The managers were questioned on a number of topics including the top suppliers for Christmas drinks and predicted sales for Q4 of 2010. They also offered their thoughts on the top advertising and promotional practices undertaken by suppliers at this time of year.
Top drink suppliers
When asked to name the top three most supportive alcoholic drinks suppliers for Christmas, it transpired that one third of respondents believed that Diageo offered the best support while 15% believed Pernod Ricard was very supportive. In the area of soft drinks, half of respondents believed that Coca Cola was one of the top three most supportive suppliers for Christmas with 37% naming C&C and 5% naming Gleesons as offering good promotional support.
The top three most supportive suppliers for Christmas non-drink products were Cadbury’s, Nestle and own brand labels. When asked why these suppliers were deemed the most supportive 50% said it was due to promotions and offers, nearly 20% said it was due to the products being good sellers and another 20% said that the merchandising support for these brands was a great help.
The managers unsurprisingly named Guinness as the top selling alcoholic drink. Over a quarter of those surveyed named Guinness as the best seller while nearly 18% named Jameson Whiskey as a top seller followed closely by Budweiser at 16% and Heineken at 11%. Smirnoff Vodka and Bailey’s Irish Cream were at 10% and 7% respectively.
The three best selling soft drinks brands at Christmas were revealed as own label cola at 32%, Coca Cola at 30% and the Club range at nearly 20%.
The three best selling Christmas essential brands were the Cadbury’s range including Cadbury’s selection boxes and Cadbury’s tins of Roses. Quality Street and Jacob’s biscuits were also cited as big sellers.
Merchandising support
Eye-catching in-store displays are vital for encouraging sales over the Christmas period so retailers rely on the brands to provide them with appropriate material to display their goods. The top three in-store alcohol displays at Christmas are said to be provided by Budweiser, Guinness and Heineken and for soft drinks the managers named Coca Cola, the Club Range, Schwepes and 7up as being very proactive in providing merchandising support. Cadburys was named by all retailers as offering a good range of in-store displays for merchandising Christmas products.
Apart from in-store displays retailers also benefit hugely from advertising and marketing support. The most important type of support according to 20% of retailers is price promotions followed closely by press ads and radio ads. Direct mail is also helpful according to 8% of retailers.
When quizzed on their expectations for the Christmas period 55% believed that business would be the same as last year, 40% said they expected to trade up from last year and 5% felt they would trade down.
Maximising sales
It is important to maximise sales around this time of year through special offers, in-store displays, extending opening hours, in-store samplings and by ensuring you don’t run out of stock and gift packs.
Good news for those in search of work is that 42% of those surveyed said they will take on extra staff to cover the Christmas period and 83% said they will give existing staff extra hours. A large amount of yearly sales are carried out over the Christmas period. 16% of managers predicted that they usually did between 15%-30% of their yearly sales over Christmas. Over 40% said they would do between 15%-30% of yearly alcohol sales at Christmas and nearly 40% said they are considering extending opening hours to maximise business.
Issues affecting trade
There are a number of positive and negative issues that retail managers are expecting will have an impact on their businesses in the next six months. These include suppliers’ prices, the budget, the expansion of Tesco, VAT increases in Northern Ireland and alcohol restrictions.There is so much hanging in the balance this Christmas with consumer spending curbed and a harsh budget to contend with. These statistics prove how important the festive season is to the retail trade and how suppliers support can greatly improve the bottom line becasue one more bad Christmas could easily spell the end for many businesses hanging on the brink.
FMI adds value to business
Mananging director of FMI Charley Stoney explains how the changing market place means we need to do more and do it better in order to succeed.
For most of us, it’s been a year where we’ve been challenged to think very differently about how we do business and completely moderate our expectations of what “success” looks like. As a service business, the model now is quite simple: We have to do more, do it better than we’ve ever done before and for less!
FMI has always focused on exceeding client expectations so the first aspect of this model hasn’t had a significant impact on how we do things. Albeit that we’re ever more conscious of working with our clients’ financial interests at heart while delivering a quality service and so gaining the trust and respect of our clients. One area of positive learning is that the trust FMI had already gained is helping us hugely to maintain strong, long-term relationships with key clients such as Cadbury, Glanbia, UPC, PepsiCo, Unicef, Superquinn, Canon, BMW, John West & Jacob Fruitfield.
Doing it better than ever before means that we have to think much more strategically about how we can add value to our clients’ business but, crucially, without adding too many additional costs to the service. This is proving to be another positive for FMI mainly due to all the work, time and money we’ve invested previously in our technology and reporting systems. Of paramount importance for our Retail and FMCG clients is being able to react swiftly to competitor pricing, environmental influences and consumer behaviour on the shop floor. In order to have any hope of co-ordinating an appropriate reaction it is essential to have this information at your fingertips.
FMI’s reporting system is geared towards collecting this information on the shop floor from our team of over 700 nationwide field staff and ensuring that it is delivered to our clients in real time via our online reporting site. However, the real added value comes in how we collate, analyse and prepare digestible data reports for our clients. FMI ensures that busy clients are informed, through our reports, in the shortest possible timeframe and can instigate appropriate actions as required.
This survey, undertaken for ShelfLife in October this year is an excellent example of how we can, through our field network, collect information using our PDA devices, and turn it into a meaningful report ready for publication, all within one week.
FMI provide and manage teams of contract or permanent field staff. The company has 15 years expertise in field sales, merchandising, auditing, mystery shopping, in-store promotions and event promotions. www.fmi.ie 01 496 3399
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