It still might only be October, but the Christmas ads are already on the telly, the decorations are up in the High Street and the Christmas ditties are playing in the shops, so it must be that time of the year to dust off the SalesOut seasonal crystal ball.
It seems like only yesterday we were writing our predictions for what Christmas 2020 might hold. Like last year, 2021 has been a time filled with new challenges for businesses and consumers, alike.
Fortunately (and not wishing to tempt fate), this year it seems as though we’re finally headed in the right direction. Recovery from the pandemic is on the horizon, though nobody knows how long it might take as we prepare to face another tough winter.
The good news for business leaders, sales teams and children everywhere is that Christmas should definitely be back on the menu. While festive events were in short supply during 2020, due to social distancing rules and gathering restrictions, the current landscape offers far more opportunities for people to get together. We saw a positive uptick in sales during the Halloween period which could pave the way to a brighter Christmas market too.
Glad tidings for retail convenience
According to our current view of the market, convenience stores are on track for a sales track of around 9% compared to 2019 numbers. Why such optimism? Well, with the pandemic still top of mind, many consumers have begun exploring the benefits of the convenience sector to avoid the crowding and concerns of the supermarket environment.
In the run-up to Christmas 2020, the number of customers purchasing products in the retail industry dropped around 4% compared to 2019. There are many reasons for this downturn, including the Covid-related closure of various outlets, and the impacts of range consolidation, as retailers struggled to maintain a healthy supply chain. The top three largest growth categories for Christmas 2020 were Alcohol (+21%), Fruit (+16%) and bakery (+14%).
As local and global trade begins to recover heading into Christmas 2021, consumers should see a greater variety of products on the shelves. This could encourage higher purchasing levels among shoppers keen to get “back to normal” for the festive season.
We predict the emerging resetting of sales activity for 2021, in line with the sales levels we saw back in the pre-pandemic period (2019). As consumers have full access to the hospitality sector again, this could also lead to a potential drop off in sales of around c.£30 million market-wide.
Will foodservice companies eat, drink and be merry?
Christmas 2020 was a particularly difficult period for the foodservice industry, where sales declined by around 44% compared to 2019. The introduction of short-notice lockdowns and blanket restrictions on operations for all leisure and hospitality outlets left many businesses reeling.
The foodservices landscape faced a hugely challenging 19% reduction in the number of active purchasing customers. To compound the problem, the customers who did remain active in the market were spending less than they had before, unwilling to invest too much cash in uncertain times.
The top three largest declining categories in 2020 compared to 2019 were alcohol (-68%), snacks, crisps and nuts (-57%), and soft drinks (-52%). With no significant restrictions on foodservices companies opening their doors for the 2021 Christmas season, this should hopefully mean positive things for the space. Many locations are already beginning to book customers for Christmas celebrations.
The recovery of the foodservice space this year will largely depend on whether outlets can remain open during the winter period. If so, we confidently predict a significant transformation of the foodservice landscape in the 2021 Christmas period. A potential sales bounce back of around .£1.50m could be on the cards.
However, the introduction of more stringent restrictions on schools, hospitality, workplaces, and similar locations will significantly reduce the chances of moving towards pre-pandemic sales results.
So, this is Christmas?
Currently, our industry remains in a state of fragile balance as we move towards the Christmas period. The festive season is one of the most significant for many groups in regard to sales potential. Our analysis shows huge opportunities on offer to foodservice operators, but only if the government’s lax approach to pandemic management remains in place.
Even the slightest tweak to the current guidelines will flip the script for foodservice and retail operators alike. The industry is sure to be holding its breath at this point.
While the Christmas of 2020 was no doubt an extraordinary one for the sector, the Christmas of 2021 has the potential to be even less predictable. For now, we can only wait and see what this festive period might bring. Whatever side of the business you’re on, here’s hoping it’s the most wonderful time of the year for you!
