How will this year compare to previous Christmases for UK business?

After COVID-19 restrictions severely dampened Christmas celebrations in 2020, retailers and consumers alike are hoping for a return to normality this festive season. For small businesses, Christmas sales make up a staggering 28% of their annual earnings. However, with supply chain shortages, and increasing concerns over the Omicron variant, will this ‘golden quarter’ see a complete return to glory?

Consumer spending across Europe inevitably dropped in December 2020, as bricks-and-mortar shops were forced to close. Vouchercodes reported that Germany, France and the UK all reported losses of around £4billion in sales revenue.

This year, however, things are looking far more positive, with the UK forecasting a record high £84.7billion to be spent. Businesses are certainly feeling that same optimism, setting their own record with £7.9billion spent on Christmas advertising campaigns, the Guardian reports. That’s an additional £1billion on last year, when advertising was more muted in sensitivity to the ongoing COVID situation.

It would seem that, despite fears of dwindling stock, the scene is set for a more familiar big budget marketing showdown this year. In fact, the concerns over supply chain hold-ups and lack of HGV lorry drivers may have even driven consumers to the shops earlier than usual. With the threat of empty shelves looming, November high street spending saw an astounding increase, despite the biggest price rises in 30 years. So, is Christmas set to be stronger than ever? And which industries are primed for a successful holiday season?

An eCommerce Christmas?

Across the whole of 2020, a strong online presence was the most popular way for businesses to survive the lockdowns. According to RetailResearch, online spending rose to £18,626million, up 56.2% from 2019. The big winners in this regard were Tesco, Sainsbury’s, Next and John Lewis. During the second lockdown of November 2020, this increase escalated as high as 80%. By the time Boxing Day came around, consumers were so saturated with sales, that the minor boost in eCommerce transactions didn’t come close to recovering the 36.6% of sales lost from bricks-and-mortar shops.

With everyone required to stay at home, a large proportion of this spending was directed towards things like home improvements. Somewhat surprisingly, computers and telecoms suffered significantly, with sales dropping almost 22%. Likewise, books and other print media sales plummeted 31.3%.

A survey from finder.com found that the top reason people cited for their lack of festive spending was the impact the pandemic had on their finances. With the economy on its way to recovery, and far less people on furlough than before, UK citizens will hopefully feel comfortable to spend more. Even in the event of a sudden Christmas lockdown, online sales could see a dramatic spike, replicating the consumer behaviours of November 2020.

A rocky road ahead for the travel industry?

According to Statistics Finland, UK visitors to Lapland dropped from 48,674 in 2019 to just 151 in 2020. Travel agents will be hopeful of a more fruitful holiday season this year. However, with countries across Europe announcing further COVID restrictions and lockdowns, it’s very difficult to know how much travel is going to be possible this Christmas. Surveys suggest that 19% of consumers are intending to make travel their Christmas treat for 2021. However, with it still being unclear how the UK will respond to the new omicron variant, nobody can guarantee if these plans will go ahead.

All being well, we should expect plenty of UK citizens to travel to see family members in the United States this Christmas. This was after the announcement of travel permissibility for double-vaccinated people. However, as it stands, people’s lockdown fears are causing them to hesitate to book festive holidays both at home and abroad.

Hospitality bouncing back

In our local communities, the hospitality and entertainment industries are hoping for a massive resurgence after a dismal 2020. Last year, CGA reports, food and drink delivery only offered partial respite as restaurant revenues dropped 57.9%. Meanwhile, pubs that were unable to operate and sell alcohol lost 81.1% in sales compared to the previous year.

This December, we should see a triumphant comeback for the sector, thanks to the return of office parties (unless they are banned) and family gatherings. Large table bookings will be a welcome sight for venue owners across the country.

A knock-on effect this could have, however, is a less successful Christmas for supermarkets. In 2020, people’s inability to attend pubs and restaurants saw an increase in supermarket purchase of food and alcohol. In residential areas, RetailResearch reports, small convenience stores saw a 7.2% increase in sales. With less restrictions this year, these businesses may not be able to achieve the same numbers.

Dress for success

With the return of Christmas parties both at work and at home, clothes purchases are due to rise. Across the whole of 2020, clothes shopping decreased by 26.3%, due to a combination of high street outlets being closed, and consumers having no events to dress up for.

According to a survey from Outbrain, the most likely age group to increase their Christmas spending this year is 18-35 year olds. People aged 36-55, and 56 and above, are likely to spend the same as usual. By targeting this younger, more sociable demographic, retailers should expect to see increases in clothes sales this Christmas.

Even with this new cloud of COVID uncertainty, it seems businesses can still be confident of a more successful Christmas than last year.

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