Every year, consumers complain that Christmas advertising starts too early, but far fewer complain about the festive discounts on offer. This year, retailers have been falling over themselves to entice cautious consumers into stores. From big-ticket items such as electronics to food and drink essentials, brands and retailers alike have been battling for a share of Christmas spending for months by dressing up price discounting in festive wrapping. However, such early promotions have led some experts to question whether 2010's Christmas offers are lacking in creativity.
Not surprisingly, the big supermarkets were among the first retailers to announce the beginning of their seasonal sales promotions.
Morrisons launched its Christmas loyalty offer in October, with an initiative that requires shoppers to spend at least £40 in five of the six weeks running up to Christmas. In return, they receive a £25 voucher to use when they spend £40 or more in-store before 1 January. Customers will also receive a £5 voucher valid for January purchases to encourage them back into stores at a time when government cuts and an increase in the VAT rate may stifle spending.
Asda is running a similar scheme. Every customer who spends £40 receives a book of money-off vouchers worth £40 to use in the run-up to Christmas on a range of own-label and branded products.
Tesco also unveiled its Christmas campaign in October. Activity includes about £800m-worth of price cuts and promotions, as well as the Big Exchange. For this initiative, Clubcard-holders can exchange Clubcard vouchers for reward tokens, at double the face value, to spend in selected departments in-store or online.
Even Marks & Spencer is running buy-one-get-one free deals on products such as mince pies.
Barbara Holgate, managing director of sales promotion agency The Big Kick, which works with brands such as Quality Street, says: 'Dealing and discounting in-store is at a higher level than ever, which will become even more evident this Christmas.'
A record 37% of grocery sales by value were on promotion in September, according to Nielsen, beating last year's peak of 36% in November. 'I don't think that Christmas 2010 will be the year for creativity and innovation in sales promotion,' adds Holgate. 'Brands and retailers won't want to move away from discounting while attempting to attract shoppers in hard times.'
Jenny Williams, associate planning director at sales promotion agency The Marketing Store, which works with electronics brand Canon, agrees that many retailers will be hesitant to use sales promotions that do not heavily involve price discounting. 'Against this hugely competitive backdrop, it is extremely difficult for manufacturers to achieve standout,' she says. 'To create real cut-through often demands heavy discounting, heavily advertised.'
Ahead of the game
One of the first examples of such activity to break this year was the launch of Sony's offer to refund the VAT on a range of products, which is being backed by a major ad campaign. The strategy is based on research by digital agency Crayon London, which highlighted consumer concern over the rise in VAT to be implemented in January.
Gemma Lovelock, managing director at TLC Marketing, which has previously run sales promotion campaigns for retailers including Boots, says: 'VAT has been a key discussion point this year, with an increase in the rate set to put a squeeze on consumers. This step up in promotional activity in the run-up to Christmas seems to be more geared to encouraging consumers to spend in the New Year. Major retailers and brands are making a real effort to promote loyalty and reward consumers with vouchers for spending in January.'
However, she argues: 'Consumers will get their purses out at Christmas. Some big retailers will always try to get brands to work on price but, at Christmas, this is lazy marketing. Why discount at a time of year when people are already spending?'
Lovelock adds that there are better promotional strategies that companies can adopt to give them standout and a more festive feel.
'Traditional high-street offers are still going strong and are recognised by customers as providing good value,' says Charlie Jones, marketing manager at Debenhams. 'However, shoppers are increasingly savvy and are well aware that there are some great bargains to be had at this time of year. People look to spread their spending throughout the months before Christmas. At Debenhams, we have a calendar of Christmas promotions that run right through to the January sale.'
She adds: 'We have adapted sales and promotions campaigns to reflect audience engagement, taking into account the importance of online browsing and shopping, social networking and our new Debenhams TV and iPhone applications.'
Many retailers are turning to digital channels to create cut-through, as the web becomes an ever-more popular platform for Christmas shopping. Retailers, including Marks & Spencer, have created online Christmas shops where customers can browse all their festive offers in one place. Others, such as Waterstone's, are also using email to target shoppers with daily offers in the run-up to Christmas.
'Lots of retailers will be using online to offer the big promotions, as it is easier for them to turn these deals on and off daily, in a way that they can't in-store,' says Lovelock.
Enticing web shoppers
Boots has cleverly combined online offers with in-store deals. Customers spending £50 online earn 1200 Advantage Card points. However, these points, which are worth about £12, can be spent only in-store, encouraging customers into Boots to browse its Christmas offerings.
The retailer is also running a range of webinars with celebrities, including presenter Fearne Cotton, who have product ranges that are part of the retailer's three-for-two Christmas deal.
To further promote its established multi-buy and gifting products, the retailer is holding Christmas shopping evenings in 272 stores in the run-up to Christmas. During the evenings, Boots is repeating its 1200 Advantage Card points offering, where consumers spend £50 to gain £12-worth of points. On the night, stores will also provide free beauty advice, makeovers and Champagne. Boots' suppliers are also invited to the event to provide free demonstrations and giveaways.
Beauty and skincare brand Crabtree & Evelyn is hosting exclusive corporate shopping events in selected stores this Christmas aimed at the businesses market. At these events, it offers employees discounts on products, free gift-wrapping and festive refreshments.
Yvonne Lehnert, assistant retail marketing manager, EMEA, at Crabtree & Evelyn, says: 'Our stores are running Christmas shopping events for staff of organisations and businesses throughout November and December. Discount levels vary, but all allow customers to enjoy complimentary beauty treatments, festive treats and Christmas cheer.'
Christmas chocolate favourite Ferrero Rocher is also putting an imaginative spin on its sales promotion activity during the festive season. It is running a large-scale sampling push, which has so far included installing a giant Christmas tree made of Ferrero Rocher in London's Covent Garden from which shoppers can pick chocolates (see box, p34).
However, not all retailers are using festive deals or events to boost custom. Craig Inglis, director of marketing at John Lewis, says the retailer prefers to focus on strong, innovative seasonal campaigns than sales promotions.
'Feedback from our customers suggests that they can find the plethora of offers and extravaganzas on the high street confusing,' adds Inglis. 'They would much rather have the reassurance that they will get great value on a consistent basis.'
However, John Lewis appears to be in the minority. 'Retailers are taking no chances this Christmas and have announced a range of promotional strategies, designed to support shoppers and to encourage them to start spending earlier,' says The Marketing Store's Williams. She adds that there is no single preferred promotional mechanic dominating the landscape this year.
What does appear to be increasingly important is that retailers and brands develop engaging ways of packaging their promotional offers.
Some sales promotion experts claim that we have yet to see this year's most innovative and engaging campaigns, as the more powerful promotions normally run for only a limited period just before Christmas, as a call to action.
Although seasonal campaigns start earlier every year, the final three weekends before Christmas remain a crucial time for retailers and brands alike. It is during this month that we will see whether retailers will start to roll out more inventive sales promotions, or price-discounting activity will continue to dominate the Christmas market.
The festive chocolate brand is expanding its 'Magic of Christmas' campaign, which it launched last year.
As part of its sales promotion mix, the brand is running a host of sampling events, including installing a giant Christmas tree made from Ferrero Rocher in London's Covent Garden, from which shoppers can pick chocolates.
The company is also installing brand-inspired Christmas trees in shopping centres throughout the country, including Westfield, in London, Meadowhall, in Sheffield, and Manchester's Trafford Centre.
In addition, the brand is running an animated projection initiative, which involves Christmas shoppers being photographed and their images projected on to the walls of the shopping centres.
The brand will give away about 500,000 samples as part of this year's Christmas activity, according to Ferrero Rocher's brand manager for pralines, Alex Glynn.
CRABTREE & EVELYN
The health and beauty brand is running a range of exclusive corporate shopping events for businesses and their employees.
Guests are treated to free hand massages and beauty consultations while sipping Champagne. They are also given a Christmas Crabtree & Evelyn goodie bag. During the events, shoppers are offered a discount of about 30% on all goods, free gift-wrapping and festive refreshments and treats.
Disney Stores across the UK are running the 'Magical Giving Tree' Christmas appeal campaign for a second successive year.
The initiative allows customers to sponsor a soft toy, with a retail value of £15, for £5. Each sponsored toy is then donated to a children's charity. Customers who sponsor a toy receive a specially designed Disney Christmas card and a collectable Mickey Mouse pin.
The campaign is being marketed as a form of alternative gift for a friend or family member. Alongside the appeal, Disney is running several in-store discount and free-gift promotions on its soft toys.