Stuart Chalmers

After several years of disrupted Christmases – first by the pandemic and now amidst continued uncertainty and rising inflationary pressures – the retail industry is eager for consumers to fully embrace this year’s festive season.

Last month, Barclay’s Business Barometer showed that Scottish retailers have made a decisive move to bring Christmas forward this year. Nearly half of Scottish retailers have opted to display their festive-themed goods earlier to help their customers spread the cost of Christmas.

However, with the holiday season now in full swing, our latest Shopping survey indicates that 64 per cent of shoppers plan to cut back on their spending altogether this Christmas. The top ways to save money include spending less on eating out (34 per cent) and food and drink at home (22 per cent). Nearly half (48 per cent) plan to spend less on presents.

The survey revealed that Scottish consumers are also disappointed with regards to “shrinkflation” – the shrinking of product sizes while prices remain constant or even rise. 71 per cent of those polled have observed a decrease in product sizes over the last year, and more than a third (36 per cent) believe that shrinkflation will impact their Christmas spending. This could shift purchasing behaviour, as consumers consider alternative brands and products or adjust their shopping habits to avoid feeling short-changed. Shrinkflation's impacts extend beyond spending to influence brand loyalty and drive shifts towards other retailers or supermarket own-label options.

Many shoppers are planning to cut back their spending this Christmas (Picture: John Devlin)

Even though we are in the throes of a cost-of-living crisis, our research shows there is good news for brands that make the right moves to improve the customer experience. The latest data indicates a large proportion of consumers (27 per cent) still favour the high street for the majority of retail purchases. 58 per cent of consumers explained that their penchant for in-store shopping is driven by the opportunity to ‘touch, feel and try’ products first-hand whilst browsing the store for inspiration.

As we highlighted in our column last month, with the wealth of customer data available to them, brands should be drawing on valuable insights to provide personalised offers. But promotions aren’t the only source of value in this landscape – retailers need to ensure they offer the best in-store experience to every customer, in order to cultivate and retain consumer loyalty in the long run.

Looking ahead to January and beyond, while shoppers are still feeling the pinch, over half (54 per cent) of Scottish consumers are confident about their financial situation improving, painting a more optimistic picture for 2024. When combined with continued preferences for in-store shopping, the next year presents retailers with valuable opportunities to earn back consumers’ trust, loyalty, and wallets.

Product quality and size reductions may offer tempting cost cuts, but they are not the keys to keeping consumers onside, either over Christmas or in the coming year. With the growth in data and analytical capability many business have invested in, or that come with the more modern tools and systems, Scottish businesses must consider how best to optimise pricing with a careful eye and an astute understanding of consumers’ switched-on attitude to ‘shrinkflation’. Alongside this analytical insight, they must also ensure the customer experience they offer in stores lives up to rising expectations – making the right products available at the right time, and at the right price, is critical. Perceptions of fairness and value are key in the fight to regain trust and loyalty and ensure long-term brand health, growth and viability in 2024.

Stuart Chalmers, Head of Retail & Co-Lead at Accenture Scotland