The pre-Christmas period is traditionally the busiest phase of the year. But given the current cautious purchasing behavior, the weeks leading up to the gift delivery are being watched with nervousness in many places. What expectations does retail have this year, what is driving consumer sentiment and why are people increasingly experiencing blockages when shopping for Christmas?
Sven Kromer, Supply Chain Lead for Consumer Industries at Accenture DACH, talks about this in an interview.
According to a recent study by Accenture, 60 percent of people plan their Christmas shopping before December. How has pre-Christmas business been going so far in Germany?
Trade is cautiously optimistic. From what we hear, he continues to plan ahead with the forecast that consumers will slightly increase their spending. Nevertheless, the mood is not euphoric – it will not go far beyond the moderate expectations. The last few weekends have already shown that. So “cautious optimism” is the key word. Uncertainties due to international conflicts or economic developments dampen the buying mood and thus stronger growth.
A change of president is imminent in the USA, and the traffic light coalition has fallen apart in Germany. Does political uncertainty affect consumer mood in the run-up to Christmas?
From my discussions with retailers, I see no direct connection between the events mentioned and purchasing behavior. Consumer sentiment is driven more by longer-term factors, in particular the economic situation, the development of incomes and purchasing power – less by individual political events, with the exception of real shocks.
What is currently driving consumer sentiment in the short term?
In these uncertain times, almost 40 percent of consumers are specifically looking for bargains in the run-up to Christmas. Nevertheless, for many consumers it is not necessarily about the cheapest thing, but rather a good price-performance ratio. According to the study, 48 percent of those surveyed are looking for retailers – online or offline – where they can get the best deal for a good price. “Value for money” is the key word here. This search for bargains is currently still being driven by uncertainty about overall economic developments and inflation.
They also found that consumers want to spend an average of 452 euros, 10 percent more than last year.
Can the fashion industry benefit from the increased spending?
In the study, we did not explicitly examine how the additional expenditure was broken down by category. But we have analyzed what the most money is spent on overall. 54 percent of respondents plan to spend their money on clothing, shoes or jewelry. That’s the biggest part. Then come 46 percent for care and perfume, followed by 39 percent for toys and computer games. Based on the general development, I believe that clothing and shoes will be at the lower end in terms of growth. There are other areas that could likely benefit more from the additional spending. I’m thinking of consumer electronics, toys and sporting goods, as these products are always popular gift options.
The study shows that people are looking for the best price-performance ratio and making comparisons is easier online than offline. But almost a third (31 percent) of those surveyed prefer to shop for their gifts in-store. Is this a contradiction or a question of age group?
Younger people in particular link these channels more closely and more naturally. It’s not an either/or. You get information online, make quick price comparisons, but want to feel and try on the product again, especially in the fashion section of the store. They might associate this with an experience with friends, going to the cinema or eating out. Then there’s shopping, which is also fun.
Can you also break down shopping behavior offline and online by age group?
The results confirm the statements above. Among 18-35 year olds, 24 percent of Germans browse online and buy offline, while among those over 60 it is only 10 percent. The picture differs even more clearly when shopping completely in the branch, i.e. “browse and buy offline”. Here it is only 4 percent of those surveyed among 18-35 year olds, while it is 29 percent among those over 60 years old.
Accenture study: The figures for Germany at a glance
- 48 percent of those surveyed are looking for the shopping location, online or offline, that offers them the best deal at a good price
- For almost six out of ten consumers (63 percent), price and performance are among the most important decision criteria
- 39 percent say they shop on special offers or discounts in the run-up to Christmas
- Consumers (70 percent) experience some sort of blockage as they feel overwhelmed by the number of options they have to choose from.
- The majority (78 percent) say they will abandon their purchase due to frustration or indecision, and almost one in four (24 percent) will shop elsewhere.
- In 2024, 26 percent of consumers plan to use their Christmas spending to buy vouchers.
- 59 percent received a gift card. Of those, 67 percent were happy about it. But again 30 percent of those who received them last year did not redeem them. With an average unredeemed value of 126 euros.
This year, according to your study, almost 70 percent of people feel blocked when shopping for gifts. Why is this the case and has this proportion increased compared to previous years?
Being overwhelmed by the many choices, especially at Christmas, has increased in recent years and is now a serious stress factor. In response to this “choice overload,” customers postpone decisions or give up on them altogether, which in turn leads to frustration. The e-commerce business has further reinforced this development. Many customers therefore want better structuring or pre-selection. Retailers who control product selection through targeted recommendations have a clear advantage. Generative AI can help with purchasing decisions by using the technology as purchasing advice.
They see vouchers as a way in which retailers can respond to the perceived helplessness when it comes to Christmas shopping. Six out of ten respondents already received one last year. But at the same time you think that the potential has not yet been exhausted.
Retailers can make greater use of gift vouchers to create real added value for the recipients. We saw that 39 percent have not yet redeemed their Christmas 2023 vouchers, with an average value of 126 euros. When asked why, 41 percent didn’t find the right product, 37 percent didn’t have time, 29 percent forgot it – all reasons that can be avoided with a personalized, end-to-end experience with gift vouchers. As a retailer, being happy about vouchers not being redeemed in the sense of “we made a nice turnover and there are no costs for this” is of course a bit short-sighted.
Why?
It makes more sense to think from the perspective of the entire customer relationship. First of all, retailers should offer recipients a real experience along the entire chain from search to redemption to use. If they are impressed by the experience, they will give away gift cards to others. This is not only a substitute for buying products as gifts, but also brings in additional business because it stimulates customers to give gifts more successfully. Of course, there is also the possibility of combined purchases: While the voucher is being redeemed, additional complementary products or services are purchased.
- Cautious optimism in the German Christmas business: despite slightly increased spending forecasts, uncertainties are dampening the mood to buy.
- Price-performance ratio and bargain hunting dominate: Consumers are looking for the best deals, although the fashion industry can expect rather restrained growth.
- Blockages when shopping for Christmas: being overwhelmed by the selection leads to procrastination, abandonment or frustration; vouchers offer potential for improvement here.