Webloyalty Easter Retail Report 2014 - a focus on consumer behaviour

Easter A focus on Easter 2014

Easter 2014

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© 2014 Webloyalty & Conlumino [email protected] | 020 7291 8720

Looking ahead ... Easter March 2014

Easter trading tips for retailers

1 Multi-buy offers are key

Food is central to the Easter festivities and the holiday presents a significant opportunity for supermarkets. With the grocery sector becoming characterised by falling loyalty in the wake of the recession, one way to boost basket sizes may be to offer multi-buy deals on products featured in traditional Easter recipes such as the meat and vegetables of a traditional Sunday roast. Waitrose has taken this one-step further by offering deals on ingredients featured in recipes from celebrity chef, Heston Blumenthal. Focussing the campaign on a recipe in this way provides consumers with encouragement and guidance to invest in less familiar ingredients. In 2013 the campaign for Heston’s Easter roast lamb featuring a recipe inspired by his boyhood memories of holidaying in Provence boosted sales of anchovies by 400%. With more than half of consumers in our survey (52.1%) typically waiting for multi-buy deals before purchasing Easter eggs, combining promotions in this way looks like a recipe for success.

2 Harness social media

In recent years supermarkets have been receiving plaudits for the quality and value for money of their own-brand Easter eggs, yet despite rising Easter egg prices, own-brand eggs still lag far behind branded eggs in terms of popularity. Marketing is certainly one area where there is room for improvement. The success of Cadbury’s “Have a Fling with a Creme Egg” Facebook campaign shows that perhaps social media may be a good platform to boost consumer awareness of own-brand eggs. The key lies in making the content interactive and engaging, employing a campaign slogan ideally with a hashtag to encourage trending and build momentum around the brand together with a clear narrative to weave the campaign story together. 3 Bring technology into stores Providing instore technology is another way for multichannel retailers to stand out from the crowd. For example, Augmented Reality enables retailers to bring static catalogue and instore imagery to life with the help of smartphone apps and provides a way for customers to gain access to extra content, making the shopping experience more fun and interactive. In 2013 Asda employed this to good effect with an Augmented Reality Easter Egg hunt in over 400 of its stores using the Asda mobile app. 4 Encourage family fun

The Easter period is critical for gardening and DIY retailers, yet shopping for DIY products is hardly the most entertaining or glamorous activity. The leisure mix in out of town retail parks has improved markedly in recent years, but retailers could still do more to appeal to families looking to combine shopping for their homes and gardens over the Easter period with a family day out. B&Q for example, has experimented with offering classes aimed at children over the Easter weekend, including one which involved assembling a wooden Easter egg holder.

Easter 2014

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Easter trading tips for retailers

5 Keep a handle on your supply chain

In such a competitive market place with competing promotions forcing prices down, retailers must do all they can to protect those precious margins. This is particularly the case in sectors such as furniture where the Easter sales period sends rival retailers into a discounting frenzy. Taking control of the manufacturing process is one way to keep supply chain costs down, but not all businesses have the wherewithal to manufacture their own products. This is where direct sourcing comes into its own. Dunelm has already made direct sourcing a major part of its growth strategy to protect its value credentials, while Oak Furniture Land keeps costs down by commissioning its furniture direct from factories in India, China and Vietnam rather than pay inflated fees from wholesalers.

6 Plan for unexpected weather

The perennial unpredictability of the British weather is making it more and more difficult for retailers to plan and time promotions effectively. Homebase, for example, has introduced a dynamic advertising strategy to rapidly shift the focus of its campaigns according to the weather: focussing on home improvement and DIY during prolonged periods of rain and switching back to outdoor living when the sun begins to shine. Having a predominantly British supplier base has also helps it to rapidly reconfigure its product selection in changing meteorological conditions. The strategy could equally apply to food retailers switching between comfort food promotions during a cold snap to burgers, sausages, salads and other popular barbecue and picnic items should the sun come out to shine. Flexible stock management could also be the answer for fashion retailers, many of whom were caught out by a lack of interest in their seasonal clothing ranges during last year’s cold snap.

Easter 2014

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Retail sector trends and forecasts

Forecast growth of the Easter retail market 2013 – 2014

Easter spending forecasts Market Dynamics

Total Easter market Many retailers are facing an uphill struggle to coax spend out of hard-up consumers. Last year widespread snow and ice made for tough Easter trading conditions and although 2014 has already witnessed record rainfall, the prospects for warmer weather are good. Whilst that bodes well for some, it may impact negatively on others. Home & furnishings, electricals and to an extent DIY retailers are likely to suffer a fall in footfall if the sun does come out . That said, a generally improving economy and housing market is likely to elicit increased demand across much of the retail sector, albeit that perhaps now more than ever consumers are prepared to shop around to achieve the best value on offer.

4,220 4,355

Total Easter retail spend (£m)

2013

2014

+3.2%

710 720

Easter Gifts (£m)

2013

2014

Easter gifts Not only are retailers facing off against the prospect of increasingly limited disposable incomes, but there is a growing apathy towards Easter as an occasion which is impacting upon the gift market. In spite of dramatic price increases in recent years, Easter eggs have largely retained their popularity. In the face of rising demand for chocolate in emerging markets, cocoa prices have leapt up recently and retailers may look to once again pass some of this extra cost on to consumers at Easter. Inflation-driven growth in food gifts is likely to be at least partially offset by deflation in the non-food sector as retailers look to discount to drive volumes.

+1.4%

Easter 2014

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Retail sector trends and forecasts

Forecast growth of the Easter retail market 2013 – 2014

Easter spending forecasts Market Dynamics

Food & drink A sunny spell over Easter would be particularly welcome for food and grocery retailers as Britons bring out the barbecues. Although there has been some slowdown in food inflation in recent months, this has largely been driven by a stabilising in prices for ambient food while fresh food inflation continues apace. Despite the promises to source from British farms in the wake of the horsemeat scandal, retailers are increasingly sourcing cheaper Polish and Irish beef which should help to offset rising meat prices. Nevertheless, food & grocery is set for a 4.5% uplift compared to Easter 2013 thanks largely to inflation and rising demand for fresh produce in the event of warmer weather.

2,010 2,100

Food & drink (£m)

2013

2014

1,500 1,535

Non-food seasonal (£m)

2013

2014

Non-food seasonal Greater momentum in the housing market is likely to be of particular benefit to DIY and home retailers this Easter. Last year seasonal clothing ranges suffered due to the poor weather and barring any repeat of extreme weather conditions, seasonal ranges should put in a stronger performance in Easter 2014. As a result of these factors the non-food seasonal market is anticipated to rise by 2.3% to £1,535m.

+4.5%

+2.3%

Easter 2014

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4,220 4,355

Total Easter retail spend (£m)

2013

2014

Easter spending forecasts : 2014

Forecast market size and growth rates

+2.4%

710

2,010 1,500

720

2,100 1,535

Gifts Food & grocery Non-food seasonal

2012

2013

+1.4%

+2.3%

+4.5%

316,681 324,126

Total retail spend (£m)

2013

2014

+3.2%

Easter 2014

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Summary of Easter consumer data

Easter – unimportant and over-commercialised The economic malaise has led to a growing cynicism around many popular retail occasions and Easter is no exception. 72.8% of consumers feel that Easter has become far too commercial, while for almost half (47.4%) Easter is either not that important or totally unimportant. Early indications are that despite the increase in consumer confidence and a seemingly resurgent economy, consumer attitudes to spending at Easter will remain fairly static this year with the vast majority of consumers (79.7%) intending to spend about the same as they did in 2013.

The great British Easter Sunday roast The tradition of the Easter Sunday roast appears to be alive and well with a notable segment of consumers. Over a quarter (26.4%) plan to cook a special meal or roast on a Sunday; a trend which looks set to boost sales of chickens and lamb in particular (17.0% of consumers intend to buy a chicken for roasting, while 12.6% are set to buy lamb). Fish has emerged as a popular alternative with 9.0% of consumers, putting it, perhaps surprisingly, ahead of other meats on 4.4%. Enthusiasm for Easter table decorations is low though with just 2.0% of consumers planning to purchase them.

A time to tend to the garden The freezing Spring of 2013 proved to be disastrous for the gardening and outdoor living markets and retailers will be praying for more favourable weather conditions this year. Almost a fifth (17.8%) of consumers intend to use their time over Easter to do some gardening making it one of the most popular Easter activities. Linked to this, over a tenth (10.3%) of consumers intend to purchase outdoor plants, bulbs and seeds this Easter. The tough trading conditions last year led to many garden centres campaigning to end the Easter Sunday trading restrictions which curtail their sales potential during what is one of the most critical periods in the gardening calendar.

Own-brand Easter eggs have some catching up to do Despite almost two thirds (62.5%) of consumers viewing Easter eggs as poor value for money, their popularity endures – 42.4% intend to buy chocolate eggs for children, while 34.2% will be buying them for adults. Branded eggs dominate with 58.1% of consumers intending to buy mostly or solely branded Easter eggs. This is despite the fact that the past few years have witnessed some substantial price increases on Easter eggs, while at the same time supermarkets have been commended for the quality and value for money of their eggs. Asda and Tesco in particular have had notable successes in taste tests over the past two Easters. It seems that something may be lacking in the marketing of own-brand Easter eggs as just 33.2% of consumers agreed that own-brand eggs are the equal of branded ones.

Easter 2014

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Easter views and spending prospects

Consumers show high degree of apathy towards Easter

Chart to the left shows the proportion of consumers that hold certain views on the importance of Easter. Chart to the right shows the proportion of consumers that say they will spend more, about the same and less on Easter products in 2014 compared to 2013.

18.7

28.7 31.7

12.3

8.7

Easter is totally

unimportant to me

Easter is not that

important to me

Easter matters to me, but it’s

not a big deal

Easter is an important

occasion for me

Easter is a very

important occasion for

me

How important is Easter? (%) How much are you intending to spend this Easter compared to last year? (%)

6.4 6.3

79.7

6.2 1.3

Significantly less

A bit less About the same

A bit more Significantly more

Easter 2014

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Easter activities

Chart shows the proportion of consumers that plan to undertake various different activities over Easter.

•  Bearing in mind the lack of importance that many consumers seem to be attributing to Easter this year, it is perhaps unsurprising that consumers’ planned activities are decidedly low-key.

•  Relaxing at home is by far the most popular planned activity, while cooking and baking feature prominently. 13.3% of consumers plan to bake cakes, biscuits or cookies over Easter, though cooking and baking are the most gender-skewed of the activities in the survey; more than twice the proportion of female consumers intend to bake (18.1% compared to 7.6% of men) while almost a third of women (32.9%) plan to cook a special meal compared to less than one fifth of men (18.6%).

What are consumers planning to do this Easter? Figures in all charts are percentages

The Easter Sunday meal takes centre stage

2.6 2.8 3.2 3.7

4.8 6.2

8.3 10.6 10.8 11.5

13.3 17.8 18.6

21.8 26.4

44.1

Something else

Take a holiday abroad

Spend more time at the pub

Have a drinks party for family or friends

Take a holiday in the UK

Go and stay with family

Have family to stay over

Visit friends

Do DIY jobs around the house

Attend a church service

Bake a cake, biscuits or cookies

Do gardening

Visit relatives

Nothing, do not observe the occasion at all

Cook a special meal or a roast on Easter Sunday

Relax at home

Easter 2014

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Easter purchases

Chart shows the proportion of consumers that intend to purchase various different products for Easter.

•  Hot cross buns and Easter eggs as the quintessential Easter foods, top the list of products consumers intend to purchase this Easter.

•  Just 1.2% of consumers said that they are intending to purchase barbecues or barbecue equipment. This may be a hangover from the unseasonably cold weather that dampened the Easter festivities in 2013 and is a reflection of just how weather-dependent this category can be. As is customary in the UK, any prolonged glimpse of sunshine is likely to see barbecue sales soar.

•  More worringly for DIY retailers will be the relative lack of enthusiasm for DIY products with just 2.8% intending to buy decorating equipment and only 2.3% other DIY products. After disastrous sales figures over Easter 2013, retailers will be hoping that the recent momentum in the housing market will help to precipitate a change in fortunes for 2014.

What products will consumers be buying this Easter? Figures in all charts are percentages

Traditional Easter gifts show enduring popularity

0.5 0.6 0.7 1.2

1.9 2.0 2.3 2.7 2.8

3.7 3.9 4.4

6.3 9.0 9.5

10.3 11.8

12.6 14.4

17.0 34.2

42.4 44.5

Indoor power tools Garden power tools (including lawnmowers)

Indoor hand tools BBQ and BBQ equipment

Easter household decorations Easter table decorations

Other DIY products Other (non-chocolate) sweets and candy

Decorating products (paint, wallpaper, etc.) Non-food Easter gifts

Simnel cake Other meat

Easter biscuits Fish

Other chocolates Outdoor plants, bulbs and seeds

Fresh cut flowers for indoors Lamb

Easter cards Chicken for roasting

Chocolate eggs for adults Chocolate eggs for children

Hot cross buns

Easter 2014

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Consumer attitudes towards Easter All figures are percentages

As with a number of other occasions, Easter is being met with growing cynicism, with over two-thirds of respondents believing that the occasion has become too commercial. This cynicism is perhaps a more general reflection of religion gradually representing less of an importance among an increasingly secular UK population.

» Easter is an important time to connect with family and friends 10.8 34.7 35.3 9.6 9.7

» Easter is an important celebration for me 8.7 19.4 30.8 21.5 19.5

» Easter has a religious significance for me 10.1 17.8 23.2 18.0 31.0

» Easter has become far too commercial these days 37.4 35.4 22.4 3.5 1.3

» Easter is a time to splash out on good food and drink 3.5 19.3 42.5 20.4 14.4

Strongly agree Agree Neither agree nor disagree Disagree Strongly

disagree

All figures are percentages

» Easter is a good time to catch up on odd jobs about the house 8.9 33.5 42.1 9.7 5.8

3.5 17.1 55.4 16.0 8.1 » I tend to leave my Easter shopping until the very last minute

Consumer attitudes

Easter 2014

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Consumer attitudes towards Easter All figures are percentages

» Easter eggs are poor value for money 25.6 36.9 25.1 10.5 1.8

» Easter eggs are a very important part of Easter 12.2 37.1 32.6 10.6 7.6

» I would rather receive a normal chocolate bar than an Easter egg 14.7 20.2 39.3 20.4 5.4

» I tend to buy Easter eggs when there are multi-buy deals on 19.5 33.1 29.0 9.3 9.0

» Retailer own brand Easter eggs are just as good as branded ones 8.0 25.2 45.0 15.5 6.2

Strongly agree Agree Neither agree nor disagree Disagree Strongly

disagree

» Easter eggs are for adults as well as kids 24.2 39.3 26.6 7.1 2.8

24.5 30.8 32.7 8.6 3.4 » There is too much pressure on parents to buy Easter eggs for kids

» Cadbury’s Creme Eggs should be available all year round, not just at Easter 20.5 23.0 36.8 9.8 9.8

Consumer attitudes


Easter 2014

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Preferred Easter egg brands

1st choice Lindt 13.7

Thorntons 12.4

Creme Egg (Full-size Easter Egg) 8.7

Green & Blacks 7.3

Ferrero Rocher 6.5

Dairy Milk 6.5

Mini Eggs (full size Easter egg) 4.6

Maltesers 4.3

Flake 3.6

Buttons 3.3

2nd choice Thorntons 11.2

Lindt 7.4

Ferrero Rocher 6.6

Dairy Milk 6.1


Maltesers 5.4

Flake 5.3


Green & Blacks 5.1

Cadbury's Caramel 3.9

3rd choice Thorntons 7.5

Lindt 6.4

Ferrero Rocher 6.0


Flake 5.8

Dairy Milk 5.8


Maltesers 4.3


Green & Blacks 4.1

Thorntons were the most popular brand of Easter egg in our survey, with almost one third (31.1%) of consumers naming them as one of the top three Easter eggs they would like to receive. Perhaps the key tenet of CEO, Jonathan Hart’s turnaround strategy for Thorntons has been to boost the company’s commercial arm by focussing more on selling to other retailers where margins are slimmer, but there is potential for a much a greater volume of sales . So far the plan seems to be working with Thornton’s primed for renewed growth and it certainly looks as though the brand has been boosted by greater visibility on supermarket shelves. Cadbury’s Creme Egg are a notable recent marketing success story. 2013 saw the brand ignite a reversal in fortunes following several years of declining sales thanks, in part, to a successful social media offensive. The campaign which invited consumers to “Have a fling with a Creme Egg” was targeted at the key 16-24 age group that are perceived as being harder to reach with standard TV advertising. Encouraging consumers to interact and engage with the brand played its part in a significant sales uplift in 2013 and this year over a fifth of consumers (20.7%) mentioned Creme Eggs as one of their top three most wanted brands.

Mentions in top 3 Thorntons 31.1

Lindt 27.6


Ferrero Rocher 19.1

Dairy Milk 18.4

Green & Blacks 16.4

Flake 14.8


Maltesers 14.0


Consumers were asked to select their top three from a selection of Easter egg brands, grading them as first second or third choice. The tables above show the top ten brands selected as first, second and third as well as a combined table which ranks the brands by overall number of mentions in consumers’ top three choices.

Easter Egg purchasing


Easter 2014

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Easter Egg purchasing

Branded Easter eggs dominate

20.7

31.3

22.4

8.3 7.6 9.5

1 to 2 3 to 4 5 to 6 7 to 8 9 to 10 More than 10

Chart to the left shows the proportion of consumers that intend to buy certain quantities of Easter eggs. Chart to the right shows the proportion of consumers that intend to buy branded or unbranded Easter eggs.

5.0

7.7

29.2

34.9

23.2

I will only buy retailer own brand Easter

eggs

I will mostly buy retailer own brand Easter eggs

I will equally buy retailer own brand

and branded Easter eggs

I will mostly buy branded Easter eggs

I will only buy branded

Easter eggs

How many Easter eggs are consumers intending to buy? (%)

Branded or unbranded? (%)

Methodology About the research

Methodology

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Methodologies and sources

•  A combination of consumer research, secondary research and market forecasting were used to compile this report.

•  Consumer research in this report is based on a survey conducted with a UK nationally representative poll of consumers. Over 2,000 consumers were interviewed during early February 2014 and questioned about their views on Easter and their likely shopping behaviour over that period.

•  All numbers relating to expenditure and forecast expenditure of gadgets are taken from Conlumino’s own retail model. This is updated on an ongoing basis with inputs from official sources (such as the BRC and ONS), retailers’ results and trading updates, other secondary sources and industry surveys, Conlumino’s ongoing programme of research into consumer spending and habits, and underlying economic drivers and trends. Conlumino analysts both model and interpret this information to provide guidance on the likely future direction of retail expenditure at an overall, sector and category level.

•  Unless otherwise stated, all sources of information are derived from Conlumino’s own research and should be referenced to Webloyalty/Conlumino.

Conlumino

020 7936 6654 [email protected]

7 Carmelite Street, London EC4Y 0BS

Webloyalty

020 7291 8720 [email protected]

19-21 Great Portland Street, London

Date post:	10-May-2015
Category:	Data & Analytics
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Webloyalty Easter Retail Report 2014 - a focus on consumer behaviour

Data & Analytics