Late in 2011, we released a study which showed that in an economic downturn, pleasurable experiences would become especially important to customers in 2012. In order to poach customers from their nearest rivals, supermarkets would need to deliver on these.

Given our forecast, it was interesting to read this week that sales of Champagne and sparkling wine over the Christmas period at ASDA rose by 23% year-on-year. According to Asda's wine buyer, Lynsey Grace, “In times of austerity, shoppers look for ways to treat themselves on a budget, and this is never more true than at Christmas."

As shoppers continue to experience pressure on their finances into 2013, it is vital that supermarkets continue to make shopping, media and product experiences pleasurable to their customers.

This week has seen a plethora of retailers publish their like for like sales figures for the Christmas period.

On the surface, there are winners and losers. Waitrose rose 4.3%, Tesco 1.8%, and Sainsbury’s 0.9%, whilst M&S fell 1.8%, and Morrisons 2.5%.

Yet look deeper, and comparisons between retailers become problematic. In the first instance, they often use different reporting periods. Whilst one retailer creates figures for the lucrative six weeks to January 5, another uses a much longer 14 weeks to the same date.

In the second instance, retailers vary in what they include and exclude in their figures. Whilst some include things such as refurbishments, extensions, inflation, cannibalisation, VAT changes, multi-buys, vouchers and discounts in their figures, others resolutely do not.

This leads to the question of whether like for like figures are a true reflection of a retailer’s performance. Debenhams is a case in point. Despite registering an admirable 5% increase in like-for-like sales during the five weeks to 5 January, it has had to revise down its full-year gross margin projections. Why? Largely because it ran sales for two extra days, and cut prices by between 25% and 50% across the store. Compare this with Next, which continues its long held practice of only putting stock on sale from Boxing Day. (This didn’t stop Next from reporting a 3.9% increase in the seven weeks to 24 December).

All of this is not to say like for likes should be disregarded. Nevertheless, management, investors and journalists need to take a more balanced view across the whole of a business’ performance, of which like for like is only one metric. Secondly, there needs to be a greater consistency and transparency when retailers create their like for like figures, facilitated through standardised accounting procedures.

ASDA’s latest income tracker research has found that the average UK family is now £50 a month worse off in November than they were in November 2010. Families have a weekly discretionary income of £146, making them £12 worse off.

Source: ASDA / Centre for Economics and Business Research 2012

It is not surprising then that there is a resurgence in the popularity of cooking leftovers. Those of us old enough to remember the 1970s will remember just how normal it was to cook whatever was left over in the fridge at the end of the week from previous meals, and rehashing the Sunday roast.

Cooking leftovers stands in contrast with two things. Firstly, cooks such as Jamie Oliver and Nigella Lawson whom the Environment Secretary Owen Paterson has recently said are too obsessed with the 'culture of perfection.' Secondly, in an age where people work more hours, and there are more mums in the workforce, ready meals and pre-packaged meals are the norm. Up to 47% of mums use ready meals each month (Touchpoints 2012).

For many of these mums, there is the challenge of learning how to use leftovers. This is an opportunity for supermarkets to help, by providing and promoting simple recipes and ideas that don’t require ingredients mums don’t already have in the cupboard or fridge. Mobile or tablet apps that mums can use to input ingredients left over could be one solution, as could regionally targeted newspaper ads, inserts, and ideas and recipes sent through the post. For example, mums in the north east and north west are more likely to use ready meals, whereas people in the South West are least likely.

Supermarkets could also do more to promote their existing recipe services. Tesco has a fantastic part of its site dedicated to providing recipes for leftovers, but some of the mums I have spoken to recently are not aware of it. This suggests that the supermarket might do more to promote this in its marcomms.

We originally posted this article at MediaTel , on 13 December

We know that many consumers are under financial pressure. The Evening Standard reported on Wednesday that whilst wage growth remains at 1.8%, the Consumer Price Index stands higher, at 2.7%. It is therefore unsurprising that YouGov estimates that households’ Christmas expenditure on food and drink will be down a considerable 8%.

The question is, which supermarkets will be impacted most?

To answer this, we used our proprietary research planning application spaceID. It shows that a significant number of supermarket shoppers have values that centre around responsibility. In an economic downturn, these shoppers are most likely to keep within their means and therefore be careful about their Christmas spending this year.

Waitrose shoppers are most likely to have responsibility centred values (34% of Waitrose shoppers), and ASDA shoppers are least likely (28%).

Proportions of all supermarkets’ customers whose values centre on responsibility

Looking at shoppers’ values alone isn’t sufficient to understand any reductions in expenditure this Christmas. To understand this, we then looked at the percentages of household income that responsibility centred shoppers spend on food. The higher the percentage, the tighter the wallets this year and the more careful they will be.

Among responsibility centred shoppers, we see that Morrisons’ shoppers spend the highest proportion of their household income on food (12.8%), whilst Waitrose shoppers spend the lowest proportion (9.3%).

Finally, we created a ranking (see left) based upon the combination of (a) exposure to responsibility centred shoppers, and (b) responsibility shoppers who spend different levels of household income on food. From this ranking we uncovered which supermarkets are likely to be most impacted by the financial positions of shoppers’ this Christmas.

Our ranking shows that Morrisons and Tesco are likely to be impacted the most across the big five supermarkets. Although Waitrose customers are most likely to have responsibility mindsets, they are under less financial pressure, meaning impacts upon Waitrose will be less than for most of the other supermarkets.

What this means for supermarkets this Christmas and into 2013

1. Although Tesco and Morrisons are likely to be impacted the most this Christmas and into the new year, they are likely to draw responsibility centred shoppers from Waitrose and Sainsbury’s, who account for around a third of all their shoppers.
2. Although Waitrose and Sainsbury’s are likely to be impacted the least, they need to protect their responsibility centred shoppers from poaching by Tesco and Morrisons.
3. Responsibility centred shoppers at all the supermarkets are likely to make supermarket own-label purchases a greater share of their baskets this Christmas and beyond. These supermarkets should promote own label in their marcomms, whilst also stressing a combination of quality and value for money.

Please have a read through this for more insight. Christmas finance FINAL.pdf (271.75 KB)