How supermarket chains are courting customers ahead of the festive season

Holidays - How supermarket chains are courting customers ahead of the festive season

Consumers are once again faced with a dilemma. Many decisions have to be made in the weeks leading up to Christmas. What to buy for your loved ones? What will be on the menu in the days leading up to Christmas Eve? One question almost gets lost in the shuffle: Where will the shopping cart be filled with delicacies and provisions?

There are probably few days of the year when Aldi, Lidl, Rewe, Edeka and other chains compete so fiercely. "Christmas madness - ho, ho get you" is how Lidl advertises its savings coupons. Aldi Nord promises "Christmas savings with the best prices" and Edeka "low prices & sky-high indulgence combined at heart".

The retail chains are facing a particular challenge this year. Inflation and economic uncertainty have been curbing the desire to buy for months. Many surveys show that consumers want to save on their Christmas spending. According to forecasts by the German Retail Association (HDE), the sector as a whole can only expect a small nominal increase in Christmas sales, i.e. in November and December, compared to the previous year. Adjusted for inflation, there is a risk of a drop of more than five percent.

Strongest sales period

Food retailers are therefore particularly keen to spread good cheer in the run-up to Christmas this year. "Many retailers are consciously focusing on cheerfulness and conviviality, on the light and contemplative," says retail expert Jörg Funder from Worms University of Applied Sciences. Because the past few years have been so dominated by difficult news, retailers are striking a chord with consumers.

Christmas business is very important for food retailers. According to the German Food Retail Association, December is the strongest time of the year in terms of sales. During Advent, weekly sales increase from around 3.5 billion to up to 4.5 billion euros by the week before the Christmas holidays. According to GfK market researchers, the two weeks before Christmas last year saw particularly above-average sales of confectionery, wine and sparkling wine, hot drinks and spirits.

Traditionally, the conditions are therefore good despite the mood of crisis. This is also due to the fact that customers' expectations rise during the Christmas period. "We want to spoil our families and do something good for ourselves. That's why people are buying more than usual and more expensive products in order to have a great festive season," says Martin Fassnacht, retail expert at WHU business school. "There is always the symbolic component that people want to impress their family by bringing certain brands to the table."

A comparison of the advertising is striking: Before the festive season, all retail chains highlight their premium ranges. Lidl offers Pacific rock oysters, caviar and Australian leg of lamb from its own premium brand Sansibar Deluxe. Rewe also offers recipe suggestions, for example for cod fillets with saffron foam and sugar snaps or polenta with red cabbage and orange salad and turkey breast fillet. The Edeka subsidiary Netto tempts with roast beef and vegan nut roast. Everyone has a large selection of drinks to toast in front of the Christmas tree. Demand is certain: according to a YouGov survey, 37% of Germans want to drink sparkling wine for the festive season.

"The discounters have benefited"

Traditionally, supermarkets such as Rewe and Edeka benefit particularly from Christmas business in December. "In the Christmas week, a typical discounter makes around 30 percent more sales, a supermarket up to 60 percent more compared to an average week in the year," says retail expert Funder. However, as a result of inflation and a change in shopping behavior, discounters have recently been able to catch up. "Customers were particularly price-sensitive this year, and the discounters benefited from this," says Michael Gerling, Managing Director of the EHI retail research institute.

It's not just the search for the right Christmas dinner that draws customers to the grocery stores before the festive season. According to a survey by GfK, many are also looking for presents. Food is one of the most popular gift categories. Wines, spirits and chocolates are particularly in demand. The non-food sector also plays an important role. Kitchen items, baking accessories, toys and clothing are particularly popular. This has one main advantage for customers: the stores offer everything under one roof - festive food and gifts at the last minute.

There is something else that can encourage grocers: The delicate signs of easing in consumer prices offer at least some cause for a more hopeful outlook for the new year. Kai Hudetz from the Institute for Retail Research believes that Christmas business will be better than last year. While 32% of people still wanted to save on Christmas dinner in 2022, this year the figure is only 24%. Savings are therefore well behind other expenses, such as Christmas presents or the Christmas tree. The festive meal is obviously untouchable for many people.

Yougov survey HDE Christmas survey IFH retail trend check GfK Christmas survey