Christmas is coming...
We know that retailers globally are preparing for Christmas earlier than ever and this trend is no different here in New Zealand. Let's be clear, it is not just the retailers who are preparing for the Christmas rush. Logistics and delivery companies around the world are increasing their fleets and hiring more staff now in order to function smoothly during the last three months of the year. By December 2017, New Zealand Post alone hired 600 extra staff, introduced 200 extra vans, 13 additional long-haul trucks, and topped it off with an extra Boeing 737 in order to handle the capacity of packages needing delivery around the country. Consumers are also preparing earlier; stocking up or staggering out their shopping throughout the year. December certainly hasn't changed from being the busiest time for retailers, yet preparing for Christmas has become a much longer process. These months of preparation are critical to a retailer's success in December.
Nothing like a Kiwi Christmas
There is a uniqueness to a summertime Christmas that differs greatly from the heavily commercialised wintery season the Northern Hemisphere inhabitants enjoy. Less than 12 per cent of the global population is located in the Southern Hemisphere, and even fewer will celebrate holidays in December, such as Christmas. That makes Kiwi consumers particularly unique during this time of year. You are going to be more likely to see boardshorts and sundresses in clothing shops as opposed to winter coats and woollen mittens. Barbecues and outdoor games will be more popular gifts, which can be used immediately due to the nice weather conditions. Additionally, gifts that travel well or are easy to ship will also be popular considering the number of New Zealanders that do some kind of travel during the Christmas period. For those consumers looking for gifts more suited to winter climes, they will likely find it offshore. The opposite is true for those in the Northern Hemisphere looking for a taste of summer, who could possibly be led to New Zealand retailers via online channels.
As Kiwis, we all know that things are different in the southern half of the world when it comes to Christmas and the holiday period. For Kiwis, school summer holidays usually begin at least a week prior to Christmas, businesses typically close their offices a few days before and some small operators close down for an extended period to enjoy the summer. People get out of town, escaping the major cities for baches, or travel to other family around the country. Shopping always peaks on or about Christmas Eve, but with so much other activity happening close to Christmas, it's no surprise that much of the retail rush is pushed into the first three weeks of December. For those consumers who must send gifts around the country or overseas, as well as those doing a significant amount of online shopping, it pushes the crunch into an even tighter timeframe to ensure everything arrives in time. But December is not just about Christmas or gifts. There are other key retail trends that are often overlooked.
For retailers, the Christmas season can last 6 months
Retailers spend months preparing for the busiest time of year, including buying product, planning promotional events, hiring and training staff, to name a few. These internal processes take months to prepare for in order for the peak trading period to run smoothly. What consumers often don't see is that Christmas begins for most retailers by September. Stock rooms begin to fill up with product held off for the Christmas season, many stores begin a recruitment process to find suitable staff and plan schedules. This organisational work is done early on in order to free up time to help serve customers, keep shelves full and general operations running smoothly during November and December.
Are consumers skipping the shops in exchange for e-commerce?
The answer is "yes"; and also "no". Yes, it is true that more consumers are purchasing online than ever before, but consumers are still going into shops in the lead up to Christmas. If they are not purchasing, often they are trying to get inspiration or ideas, and will likely be purchasing online. Bricks and mortar retailers should aim to keep windows, displays and all visuals in store as gift focused and enticing to customers as much as possible. This will help draw them into store and engage with your products. Remember, without well trained and helpful staff during this busy time of year, customers are more likely to feel dissatisfied with the in-store service. Don't forget to keep your digital offering up to date so that customers who have been browsing in store can buy from you online too.
It is common for e-commerce platforms to include a gift guide in the lead up to Christmas. Break it down into categories or price points if that applies to you and your customer. Demonstrate to consumers why your business has something for everyone and can be a one-stop-shop. Whether or not you operate a bricks and mortar store as well, you'll need to start preparing in the coming months for increases in online sales. Nearly 40 million packages were delivered by NZ Post alone last December, a number expected to increase in 2018. It will be crucial for retailers to ensure that they are not underdelivering in their online operations.
Other trends for retailers to consider
A significant portion of retailers which increase staff numbers for the summer holidays are soon looking for casual workers. The majority of this workforce is made up of college and university students, those who have summers off to work a second job or tourists on a working holiday visa. We often hear from our members that it can be difficult to find good quality staff and we understand the stress that can put on a business. The first step to ensuring you are getting the best quality candidates all year round is to have a formal recruitment process in place, thoroughly complete reference checks and include a trial or mock sale on the shop floor as part of the interview. Don't wait till crunch time to sort out additional staff. Ensure that this is done enough in advance that you have a wide selection of candidates to choose from.
Because so many Kiwis are escaping from the main cities for the Christmas and summer holidays, we do most of our gift shopping prior to the last few days before Christmas. This trend has led to many retailers pushing Boxing Day sales up to the last few days before Christmas instead. Often there will still be an extra discount or additional items on Boxing Day that you cannot get beforehand, but this trend is a good last push to make those sales. This is a particularly enticing trend for those last minute and discount savvy shoppers. Let's not forget where most consumers are spending the biggest dollars: supermarkets.
Yes, it is true that December is a peak month for retailers, and often a retailers last chance at being able to have a profitable year as sales generally decline in the fourth quarter. But December is where we see peak spending in categories such as grocery and alcohol, while clothes retailing along with building and hardware often see a decrease in spending. December is a particularly social season, so it is not surprising that most Kiwis spend more money on food and drink than other tangible items. Most supermarkets have a Christmas Club of some kind, advertising to consumers from mid-year to encourage them to save up now and spend big in December.
Putting Christmas at the top of your list
While still a few months remain before overdrive kicks in as retailers and consumers gear up for the summer season, this is a good time for retailers to take stock of their business and start planning if they haven't already. Organise stock rooms, prepare for incoming product, decide if you need to recruit, and get the behind the scenes work done now. Consumers have high expectations of Kiwi retailers, and with millions of tourists who come into the country between November-January retailers will certainly notice an increase in foot traffic. If consumers are getting ready for Christmas in July, retailers should too.
by Scott Fisher, Retail NZ CEO
Originally published in the October/November 2018 edition of the NZ Retail magazine.