Ways to secure a chunk of the Gifting pie in non-Xmas trading periods
By Peter Huskins, Director of ShopAbility, for Retail World Magazine February 2009 issue
Sitting here quietly thinking about Valentine’s Day, if I am game enough to forget the chocolates again this year, I got to thinking about the amount of possible gifting occasions that occur in this half of the trading year. The second half is the busiest half of the year with more well recognised occasions for gift giving than the first half – Christmas is obviously the largest and busiest and is in the first half of the trading year, but ask any retailer (particularly food) to nominate the next busiest trading period and it is Easter. But we also have Valentine’s Day, Mothers’ Day, Australia Day, Halloween throughout the year to name a few, and what about all of those birthdays/ weddings/ anniversaries/ bridal showers/ births/ engagements … the list goes on and on! So how do we go about understanding what the market may look like, or even more importantly – how do we crack it and gain our rightful share of each of these occasions, or at least the biggest ones.
How Big Could The Market Be?
Understanding what the possible size of the market may be for Gifting is the first step. This information is not freely available and has probably never really been estimated, and therefore it provides a general overview rather than being targeted. The below table seeks to estimate the size of the overall small gift market, for the sake of the argument, for gifts under $30. The figures are purely an estimate and have been constructed to give some idea of the potential size of the prize we are missing out on.
Figure 1: Estimated size of gifting market. Source: Shopportunity estimate.
| Category small gift <$30 | Total market $ Millions | Estmated gifting share | Estimated small gift market $ millions | Super- market share % | Super-market $ | Non Grocery $ |
|---|---|---|---|---|---|---|
| Toys |
$1,429
|
90%
|
$1,286
|
10%
|
$129
|
$1,157
|
| Greeting cards |
$600
|
100%
|
$600
|
10%
|
$60
|
$540
|
| Wine |
$2,000
|
30%
|
$600
|
25%
|
$150
|
$450
|
| Clothing |
$1,700
|
20%
|
$340
|
10%
|
$34
|
$306
|
| Flowers |
$700
|
40%
|
$280
|
25%
|
$70
|
$210
|
| Books |
$750
|
30%
|
$225
|
15%
|
$34
|
$191
|
| Music – CDs, Videos |
$550
|
30%
|
$165
|
10%
|
$17
|
$149
|
| Cosmetics |
$240
|
30%
|
$72
|
20%
|
$14
|
$58
|
| Fragrances |
$120
|
30%
|
$36
|
20%
|
$7
|
$29
|
| Boxed Chocolates |
$300
|
75%
|
$225
|
60%
|
$135
|
$90
|
| Homeware |
$500
|
30%
|
$150
|
25%
|
$38
|
$113
|
| Pottery |
$150
|
40%
|
$60
|
10%
|
$6
|
$54
|
| Plants |
$250
|
20%
|
$50
|
20%
|
$10
|
$40
|
| Wrapping Paper |
$40
|
80%
|
$32
|
30%
|
$10
|
$22
|
| Manchester |
$300
|
10%
|
$30
|
15%
|
$5
|
$26
|
| Total |
$9,629
|
43%
|
$4,151
|
17%
|
$717
|
$3,434
|
As can be seen, it is estimated that the small gift market, defined as gifts <$30, is around $4 billion per year. Supermarkets do not traditionally target the broader gift market and yet enjoy around 17% share of sales of the categories we have nominated, around $700m in total. That leaves a market of around $3.5b currently being serviced by other small retailers, alternate chains and formats. Supermarkets generally target Confectionery – primarily boxed chocolates – wrap and cards, flowers, a few toys but not a really concerted effort to uncap hidden opportunities that exist in current or new categories Does this offer an opportunity to target Gifting across Grocery, and also across other channels we service as well?
It Starts With An Occasion
For household categories that are guest-facing, you might be able to uptrade shoppers to a higher quality product. Several studies have highlighted the tendency for consumers to trade up to higher quality items across most categories during celebration seasons due to ‘snob value’ – the need to impress guests. Products in this category include beverages such as juice and coffee, and personal care items such as soaps, handwash and, yes, toilet paper. Also paper towels and air fresheners work well.
In Summary: Know which bag of shopper tricks you need
Here is where Valentine’s Day comes in – and any other occasion for that matter. It does not have to be one of the well known and well worn “public” events that dominate the calendar and the cycle of public holidays. Each of us has a series of occasions in our circle of family and friends that are regular (birthdays and wedding anniversaries) and ad hoc (engagements, dinner parties, 21st’s). It has been estimated that the average supermarket has nearly 6,500 gifts bought each week from the catchment area they serve. Now multiply that by a possible average sale of $20 and the potential gift market could be around $130,000 each week – that is only from that store’s existing customers!
Figure 2: Potential value of gifting per store. Source: Shopportunity estimate
| Average store sales per week | $750,000 |
| Average basket size | $31 |
| Number of shopping visits | 24,194 |
| Average visits per household | 2.2 |
| Number of household per store per week | 11,000 |
| Number of gifts bought per year per hhold | 30 |
| Total gifts per store – 11,000 x 30 p.a | 330,002 |
| Potential gifts bought per week | 6,346 |
Who is the shopper buying for?
a) Is There a ‘Type’ of Gift Shopper? For example:
- ‘On a budget’, eg I only have $X to spend across everybody, or $X per person
- ‘Desperate’ – last minute Xmas shopping in Intimate Apparel or Cosmetics at Xmas for example, money no object – just get me out of a bind!
- ‘I’m Sorry’ – speaks for itself really.
- ‘Thank you’ – maybe as a dinner guest or for a special friend
- ‘Responsible’ – buying a gift on behalf of others, a farewell gift for example
- ‘Oh yeah’ – those that have forgotten an occasion or it’s not on the radar yet
- ‘Give me an idea’ – really shopping for ideas, but one step before ‘desperate’
- ‘The right thing’ – I want to buy them the right thing to show I care, regardless of the cost
In reality, a shopper might be one of, or a mixture of, the above depending on who they are buying for, the occasion and how much time they have before the event occurs. b)What’s their relationship to the ‘giftee’? The shopper’s relationship to the gift recipient is at the core of what they are likely to buy and what they’re likely to spend. But in what channel they chose to buy the gift is also at the heart of solution. Let’s look at three levels of relationship – Intimate, Close, Distant – and their impacts on gifts bought.
Intimate
- Who they are: immediate family such as mothers, fathers, kids, wives, husbands
- Shopper mindset: I want to show that I spent time and effort in thinking about them and make sure that they I get exactly the right thing for them. Price is not very important. I am happy to spend several hours getting the right thing.
- What they buy: specific, high value products and brands, potentially with a degree of uniqueness or customisation. Unlikely to be gift box format unless a very high value item.
- Categories: books – specific authors; music – specific artists; home entertainment; perfume – premium and couture; fashion accessories – belts, scarves, ties, handbags; jewellery; digital and electronic devices; toys and games – higher value; tools; sports and leisure eg golf clubs, fishing rods; high value vouchers; chocolates (high end, as additional present to the primary one).
Close
- Who they are: close friends seen frequently, aunts and uncles, nieces and nephewsShopper mindset: I’m happy to spend a few dollars on something nice that shows I know them but isn’t too intimate. And I don’t want to spend hours looking for it.
- What they buy: category may to be matched to individual recipient, but may or may not be brand or product specific. May be in gift pack format.
- Categories: books, music and DVDs – category specific; liquor – focus on bottled wine, sparkling wine, spirits, imported, micro and home brewed beers and kits; gift wrapping and cards including tags, bags; perfume – mainstream, gift boxed; personal care pampering – bath packs, footcare packs, skincare; homewares – kitchenware eg platters, particularly with an entertainment focus, candles; toys and games (low cost) – for both kids and pets; pot plants and flowers; cosmetics – giftboxes; chocolates mid to high end eg Lindt, Cote D’Or.
Distant
- Who they are: friends seen only occasionally, acquaintances and work colleagues, clients, extended family eg cousins
- Shopper mindset: I need to be seen to be doing the right thing but don’t want to spend too much time and money. How many people can I knock over all at once in one store for a total of $X? What can I buy in bulk?
- What they buy: categories not matched to individuals. Generic, ‘safe’ categories, lower value items, likely in gift box/value pack format. Multiple recipients may receive the same item.
- Categories: liquor – red wine, gift boxed liqueurs with glasses; gift wrapping and cards including tags, bags; homewares – candles; toys and games – stocking fillers; pot plants and flowers; chocolates including themed eg Santas; food items eg hampers.
Impacts on POP Execution
So, the type of relationship impacts what is bought. This in turn impacts how the category should be executed. Let’s look at how each of the Relationship categories would work instore:
Intimate categories Brands in categories falling under Intimate relationships should focus on their own branding, uniqueness and point of difference. Ensure your Retail Media and POS embodies your brand and reinforces shopper decision why they should buy you. Do NOT use seasonal colours in the point of sale for example. Focus on shelf, and ideally an additional display in the immediate vicinity of the category, as the category is a destination. Price point is relatively unimportant for high emotional involvement purchases.
Close categories Products in categories falling under Close should concentrate on quality and value for the money, particularly for gift boxes. Retail Media and point of sale should carry images of the gift pack and outline its contents and the price point i.e. “For $XX you receive all this … “ Displays should ideally be located at the front of the store, or at the least within the category vicinity. High attraction to well located secondary displays with branded display units.
Distant categories Front of store rules for displays in distant categories. If you’re not at the front of store or on a gondola end, don’t bother. Colour up your Retail Media and point of sale to reflect possible themes, decide on a sharp price point, and communicate value – provide an incentive to buy your product vs the competitor’s. Quality is less important here than price and convenience. Ideally use promotional staff to communicate your product and generate trial if necessary.
This can be summarised thus:
| Relationship type to gift recipient | $ spend per recipient | Time spent finding gift per recipient | Order Shopped for | Retail role | Gift type | Role of price and promotion | Retail Media & Merchandising focus |
|---|---|---|---|---|---|---|---|
| Intimate | High | High | First | Value | Specific brand or item | Low | ShelfSmall display in the destination category area
Unique branding |
| Close | Medium | Medium | Second | Volume | Generic category | Medium | Front of store displayQuality/value message |
| Distant | Low | Low | Last | Volume | Generic category | High | Front of store displaySampling/trial
Christmas message Discount price |
What about other categories?
So what if you’re not in an Entertaining or Gifting category? Eg, what if you are:
- Apparel (lingerie, socks and jocks, and apparel vouchers excepted)
- Staple foods eg milk, bread, toilet paper
- Health foods and health products
- Personal care staples eg shampoo, toothpaste
- General household goods eg garbage bags?
Staples don’t require being “gifted” up as they bear little relevance to the occasion. Eg, it’s hard to see role of toilet paper on Easter promotion unless there’s a novelty roll of loo paper with bunnies etc on it. You can capitalize on the stock up shopping occasion and additional store traffic with price promotion and ‘just in case’ retail media messaging without turning everything to bunny rabbits and adding to the clutter.
The Uptrade Opportunity
For household categories that are guest-facing, you might be able to uptrade shoppers to a higher quality product. Several studies have highlighted the tendency for consumers to trade up to higher quality items across most categories during celebration seasons due to ‘snob value’ – the need to impress guests. Products in this category include beverages such as juice and coffee, and personal care items such as soaps, handwash and, yes, toilet paper. Also paper towels and air fresheners work well.
In Summary: Know Which Bag Of Shopper Tricks You Need
So as we’ve seen it’s all about the occasion and the shopper’s relationship with the gift recipient. If you’re a Distant category then it’s all about Zigging – rollout out the POS and the sharp price point and ‘buy in bulk’ messages. If you’re a Close category or entertaining occasion the focus is on communicating the occasion, quality/value equation and convenience of one-stop-shop. And If you’re an Intimate category or a household staple not related to the occasion you should Zag - stay away from the themed colours and messaging and instead concentrate on branding and uptrade. Are you in a gifting occasion category? If not, can it become gifting by changing pack format or gift boxing – eg single serve chocolate bars vs gift box chocolates? Can your category ramp up the indulgence factor to play in gifting occasions? Who would buy your category, for whom? And what does this mean for pricing and execution?
