Navigating the Golden Quarter: Capgemini’s Retail Trends and Predictions for Christmas 2024

As we approach the festive season our experts explore the key trends shaping Christmas in 2024 across the retail landscape, from Grocery to High Street and Luxury sub-sectors. We’ll examine the interplay between digital and physical shopping experiences and uncover the strategies retailers need to deliver a winning festive season.

After a challenging budget announcement, UK retailers are banking on a record £88.3 billion in holiday spending to bolster recovery after a turbulent year, with £7 billion in Black Friday deals alone. Research  highlights a focus on close family ties, with 53% of consumers intending to spend more on their children and 33% investing in gifts for their spouse. This points to a shift towards thoughtful, relationship-driven purchasing behaviour. 

Grocery: A Shift in Consumer Sentiment  

UK supermarket leaders are expressing cautious optimism about Christmas food shopping. While the shadow of inflation continues to linger, early signs suggest shoppers are embracing the season with a mix of pragmatism and indulgence, meaning spend on Christmas food is estimated to rise by 4%. This conservative increase can be accounted to what The Grocer is terming a ‘Tale of Three Christmases’ which segments the nation into three groups:   

1. Healthy Households (20%) – those in a comfortable financial position and likely to indulge in a more extravagant festive season, with significant spending on premium items and experiences.  

2. Recovering Residences (46%) – those who describe their finances as ‘OK’; Christmas 2024 could represent their first ‘normal’ festive season in years, but recessionary habits picked up from the cost-of-living crisis remain.  

3. Difficult Dwellings (34%) – those who are struggling financially, and the thought of a ‘normal’ Christmas may feel very distant.  

This will have clear implications for the Christmas communication strategies of brands and retailers, and UK grocers are taking different approaches to capture the hearts –and wallets – of consumers this Christmas.  

Tesco is targeting festive shoppers with innovative product launches, including 250 new seasonal items under its premium Finest Chef Collection range, offering restaurant-quality food at affordable prices. Aldi anticipates a record-breaking Christmas, with shoppers already stocking up early, according to CEO Giles Hurley, who highlights the retailer’s focus on unbeatable value during tight financial times. At Lidl, CEO Ryan McDonnell remains committed to affordability despite rising costs, aiming to help customers enjoy a full Christmas spread without extra strain. Meanwhile, M&S is leaning into indulgence, showcasing its premium festive offerings, which have seen strong early sales as customers selectively splurge on quality experiences. 

This mixed sentiment reflects the polarisation and evolving priorities of UK consumers. While value remains a crucial driver, there is an evident desire to make Christmas feel special. We explore the different drivers that could see supermarkets excel this golden quarter.  

The Battle for Value  

Intense competition among grocers is pushing prices down, to the benefit of customers. Retailers are leveraging compelling pricing to secure early sales, particularly on festive staples. For example, Tesco recently offered Baileys for £10 – less than half its RRP of £22. Nearly a third of grocery spending in December 2023 occurred on promotional products, and this trend is expected to continue, with value-driven consumers seeking deals early.  

Capturing early spend is critical for grocers, not just to secure immediate revenue but also to influence customers’ choice of where to complete their larger Christmas shops. The stakes are high, as evidenced by early purchases – by mid-November, 15% of the UK population had already indulged in a mince pie, and 650,000 shoppers had bought a Christmas cake.

Timing and Shopping Patterns  

It is well known that consumers predominantly shop for food and alcoholic drinks in the last week before Christmas due to the fresh and perishable nature of the products. This year, Christmas falls on a Wednesday, introducing a new dynamic to festive shopping behaviour. Unlike 2023, when Christmas on a Monday compressed shopping into a few intense days, this year’s calendar allows for more gradual preparation:  

• Weekend Build-Up: Shoppers are likely to spread their purchases, visiting discounters for staples before heading to premium stores for indulgent treats.  
• Monday and Tuesday: These days offer a final window for last-minute purchases, giving retailers one last chance to secure basket share.

Retailers must focus on availability and value proposition, ensuring shelves are stocked and promotions are visible. Strategic advertising and competitive pricing will be key to capturing customer attention during these critical days. This is where the rise of Retail Media Networks becomes particularly advantageous as an additional revenue stream for retailers.

Brands vs. Own Label: The Competitive Dynamic  

This year, branded goods are regaining ground. According to Kantar, branded purchases have grown by 4.9%, outpacing own-labels growth of 2.7%. This marks a reversal from 2023, driven by several factors:  

1. Stabilising Inflation: Easing pressures have allowed branded goods to compete more effectively.  

2. Enhanced Promotions: Brands have sharpened pricing and launched ambitious promotional campaigns, recovering volume and market share lost to private labels.  

3. Digital Engagement: Gamification and personalised pricing on online platforms are helping retailers win the Christmas basket through innovative, customer-centric strategies.  

Simultaneously, premium private labels continue to thrive. Sainsbury’s “Taste the Difference” range, for instance, has seen an 18% year-on-year increase in sales – a striking achievement for early Q4. This trend reflects consumers’ willingness to invest in high-quality items while benefiting from the value associated with private-label pricing.

Christmas Dinner Dilemmas  

As the festive season approaches, key players like Tesco, Sainsbury’s, and M&S have posted strong performances throughout the year. But Christmas shopping often reshuffles the deck. Ultimate success hinges on in-store experience, product availability, and competitive pricing. 

Will customers prioritise premium brands and indulge? Can innovation in product selection shift shopping behaviour? Or will discounters like Aldi and Lidl dominate again, appealing to stretched budgets post-Black Friday? 

General Merchandise: The Rise of Value Retailers  

As cost-conscious shopping continues to prevail, consumers are gravitating towards value-focused retailers for gift-buying and party-season outfits. This positions brands like TK Maxx, B&M, and Primark to excel this festive season. 

TK Maxx continues to attract value-conscious gift-seekers, leveraging its off-price model. According to The Business of Fashion, 70% of consumers plan to shop at outlets or off-price retailers in the coming year, even if their finances improve. This sentiment aligns with B&M’s performance, which has reported robust sales growth ahead of the golden quarter driven by its focus on “price, product, and standards,” and solidifying its appeal to budget-conscious shoppers.  

Even those retailers not usually perceived as ‘value-focused’ are leading with value plays. Despite the challenges, certain retailers are already seeing positive signs. M&S CEO Stuart Machin reports strong early demand for partywear and quoted; “Our customers are anticipating they’re going to spend more this Christmas than last year,” signalling a boost in consumer confidence for the festive period

Rental Fashion: A New Way to Save  

Party-dressing season has made a strong comeback after the significant setbacks of the Covid era. This year, consumers are exploring ways to cut costs without compromising style, and the fashion rental market has seen explosive growth in 2024. Rental fashion is becoming a go-to solution for partygoers seeking affordable, stylish and sustainable options, highlighting a shift in festive dressing habits. Platforms like Hurr and ByRotation have expanded their services, with ByRotation launching the “world’s largest high-fashion rental shop” just in time for the festive season. In a unique twist, Deliveroo has partnered with Hurr to offer outfit deliveries in as little as 20 minutes, rescuing any last-minute wardrobe crises. Traditional fashion brands, such as H&M, are having to adapt to the growing popularity of fashion rental by integrating rental services into their business models and forming strategic partnerships. This approach allows them to tap into the rental market while maintaining their traditional retail operations.

Bricks & Mortar Vs Ecommerce: Challenges on the High Street  

The UK high street is often viewed by shoppers as a fallback option for last-minute gifting when online delivery deadlines have passed. 

While BDO reports a modest 1.7% annual increase in in-store sales for September, rising costs, and tax changes continue to squeeze margins, forcing many retailers to reevaluate their physical store strategies. The persistent dominance of online sales—outperforming in-store sales in nine of the past ten months—adds further strain, sparking concerns of closures in towns and cities.  

However, a countertrend is emerging as some consumers seek out independent retailers, drawn by their focus on ethical and sustainable practices. These local stores, often offering unique and personalised experiences, are carving out a niche in an otherwise competitive landscape.

To compete with independents and online sales this Christmas, the high street can focus on creating immersive and memorable in-store experiences. Festive displays, live events, and personalisation stations can draw shoppers in, while exceptional customer service, exclusive in-store offers, and seamless integration with online channels add convenience. Interactive elements like Augmented Reality (AR), holiday workshops, and pop-ups from local brands can make shopping feel special, while festive treats and community-focused initiatives foster a sense of warmth and connection. By turning stores into vibrant holiday destinations, the high street can reignite the magic of in-person shopping, balancing convenience with authentic experiences.

An Ever-Evolving E-commerce Landscape  

With enhanced delivery capabilities, tailored recommendations, and seamless checkout processes, e-commerce is set to dominate the festive shopping season due to its convenience and speed. E-commerce sales during the 2024 holiday season are projected to grow between 7% and 9% compared to last year, which is more than double the anticipated overall retail sales increase for the same period. 

Industry analysts predict this rise to be driven by established giants like Amazon and eBay, alongside the growing influence of newer platforms such as Instagram and TikTok Shop. These social commerce channels are reshaping the online shopping experience by blending entertainment with instant purchasing options, making them particularly appealing to younger audiences. 

Standing out in the crowded and highly competitive online marketplace, where platforms like Google Shopping make price comparisons effortless, is no easy task for retailers. ASOS, under CEO José Antonio Ramos Calamonte, remains cautious, acknowledging that “the market is still really volatile.” The retailer faces intense competition from low-cost, ultra-fast giants like Shein and Temu. Shein appeals strongly to value-conscious shoppers with its vast selection of affordable clothing, beauty products, and home goods, further heightening the pressure on established online retailers.

Leveraging Loyalty and Technology as Key Differentiators  

To truly differentiate this Christmas, retailers can combine loyalty programmes with cutting-edge technology to deliver innovative, immersive, and personalised shopping experiences. Imagine app-driven loyalty schemes powered by AI that reward not just purchases, but customer engagement—like sharing wish lists, reviewing products, or attending in-store events. Gamified elements, such as unlocking festive discounts through interactive AR treasure hunts in-store or on mobile, can create excitement and drive foot traffic. For example, we’ve seen the likes of Tesco & Lidl launch digital advent calendars as part of their loyalty programmes, increasing customer engagement and adding excitement to the shopping experience. Building on this, online, blockchain-based loyalty tokens could allow customers to redeem rewards seamlessly across multiple retailers. Smart mirrors in physical stores could recognise loyalty members and suggest outfit ideas based on purchase history, while AI-driven chatbots and virtual assistants provide real-time gift suggestions for online shoppers. By embracing these forward-thinking approaches, retailers can create unforgettable experiences that drive loyalty and maximise holiday sales, whether their customers are online or in-store.

Luxury  

As a globally interconnected sector, the challenges of the luxury market extend beyond the UK’s cost-conscious consumers. This year, the global luxury market has experienced a sharp decline in consumer demand and a significant drop in sales in China, which was responsible for 16% of global luxury spending last year.

This turbulence has left some of the industry’s biggest names grappling with setbacks. Matches went into administration, Farfetch narrowly avoided collapse thanks to a rescue deal by Coupang, and even titans like LVMH have seen shares plummet by 15%. Meanwhile, Burberry has issued profit warnings, and Kering reported a dramatic 16% drop in like-for-like revenues in Q3.

These difficulties have prompted brands to recalibrate. Over the last six months, Fendi, Mulberry, and Burberry have all hired new CEOs in a bid to steer their companies towards stability and renewed growth. However, some brands have defied the economic headwinds. Prada Group, buoyed by its youthful subsidiary Miu Miu (with sales up a staggering 105%), has seen net revenues climb by 15%. Similarly, ultra-luxury giants like Hermès and Chanel, backed by strong brand identities and unwavering pricing power, continue to outperform the market. Chanel is on track to surpass £16 billion in sales this year, driven by its emphasis on craftsmanship, scarcity tactics, and timeless appeal. 

The Luxury Promotion Paradox  

HSBC reported that in Europe, the average price of luxury goods has increased by 52% since 2019, with consumers citing that quality levels remain static or have even deteriorated. For many luxury brands, maintaining exclusivity and prestige outweighs the lure of Black Friday discounts. Iconic names like Chanel and Hermès famously abstain from discount events, maintaining their exclusivity and brand cachet. However, others have embraced the sales frenzy to boost revenue. 
This Black Friday, luxury e-commerce platform Net-a-Porter and department store Harvey Nichols, are offering up to 50% off select new-season items, attracting bargain-hunting shoppers. But how sustainable and profitable is this approach for high-end retailers?  

Meanwhile, the rise of ‘dupe culture’—where non-luxury brands create budget-friendly alternatives to iconic luxury products—has disrupted the market. These accessible imitations resonate with Gen Z consumers, offering affordable indulgence without the luxury price tag. As this trend gains momentum, it poses a growing challenge to traditional luxury brands and is expected to shape the sector well into 2025. 

London and Bicester Village: Luxury Hotspots  

London remains a critical hub for luxury retail, thanks to its status as Europe’s wealthiest city. For luxury boutiques, affluent locals represent a vital customer base, with 78% of retailers ranking resident wealth among the top three factors for success. 

Luxury tourism remains imperative for boutiques within the UK, with international visitors drawn to iconic shopping destinations like Bond Street and Sloane Street, particularly during the festive season thanks to their stunning displays. However, the removal of Tax-Free Shopping for international visitors has curbed sales, diminishing London’s allure for global luxury shoppers.

In contrast, Bicester Village, the designer outlet just outside of London, continues to thrive. Offering discounts of up to 80% off top-tier brands, the shopping destination attracts both domestic and international visitors. Festive touches, such as fake snowfalls and live Christmas music, enhance the shopping experience, while initiatives like “Letters to Father Christmas”, engage families. Notably, it’s estimated 80% of Chinese tourists visiting the UK each year make a trip to Bicester Village, underscoring its importance as a luxury retail magnet.

Winning Strategies: Crafting Connections  

Despite its historical resilience, the luxury sector must now work harder than ever to capture the hearts of consumers during this crucial period. To succeed, winning retailers are returning to fundamentals:  

• Craftsmanship and Quality: Exceptional quality and attention to detail remain the bedrock of luxury appeal.  
• Storytelling and Authenticity: Innovative narratives that resonate emotionally with consumers are essential to stand out.  
• Bespoke Experiences: Luxury retailers must tailor offerings to regional nuances and create personalised, memorable shopping experiences that the high street doesn’t have the margins for.  
• Balance of Technology and Human Touch: Striking the right balance between digital touchpoints and authentic, in-store interactions will be key. Digital advancements such as virtual styling tools and exclusive online content should complement—not replace—the personal service that defines luxury.  

As economic challenges persist, luxury brands which prioritise customer-centric strategies, invest in their heritage, and innovate their engagement approaches will remain poised to thrive.

Sustainability in Retail: A Universal Mandate  

Sustainability has become a pivotal focus for retailers across all sub-sectors, shaping product offerings, marketing strategies, and consumer engagement this festive season. As the holidays, often synonymous with excess, highlight the environmental impact of retail, brands have an opportunity to stand out by showcasing their commitment to eco-conscious practices. 

Conscious Gifting  

This holiday season, the growing emphasis on sustainability aligns with the trend toward more meaningful gifting. Consumers are increasingly drawn to products that tell a story—whether handcrafted by local artisans, made from sustainable materials, or tied to a charitable cause.  

For instance, Bulgari has partnered with the charity Save the Children, donating proceeds from select jewellery pieces to support education and emergency relief programmes.  

Luxury retailers like Chanel and Gucci are setting benchmarks with carbon-neutral supply chains and sustainable materials, while high street brands such as John Lewis, are curating “sustainable gifting” sections. 

Circular luxury is also gaining traction and offers a ‘win-win’ for customers and brands alike. With resale platforms like Vestiaire Collective and The RealReal providing eco-conscious shoppers with access to pre-loved items, luxury is more accessible and sustainable. Similarly, department stores like Selfridges have hosted pop-ups promoting resale and rental as viable, planet-friendly alternatives.

Sustainable Packaging and Waste Reduction  

Sustainable packaging has become a priority across all retail sectors. From high street to luxury, retailers are swapping traditional materials for biodegradable, reusable, or recyclable options. M&S, for instance, eliminated glitter from its Christmas cards and wrapping paper since 2019, opting for fully recyclable designs. Meanwhile, luxury players like Tiffany & Co. continue to innovate with eco-friendly versions of their iconic packaging.

Reducing waste has also inspired new approaches to seasonal decorations and promotional materials. Sainsbury’s and Waitrose have rolled out initiatives to minimise single-use plastics in festive decorations, while luxury outlets such as Harrods are promoting reuse.

E-tailers, facing challenges with delivery emissions and waste, are innovating with recyclable packaging and carbon-offset shipping options. The rise of curated algorithms has further enabled e-commerce brands to reduce waste through overproduction by predicting demand more accurately. ASOS and Zalando, for example, have incorporated AI-powered tools to optimize stock management, minimising waste and markdowns post-Christmas. Additionally, many platforms now highlight sustainable product lines, allowing shoppers to filter items based on ethical certifications. Lastly, the impact of an extended returns policy during the Christmas period on reducing waste is significant and cannot be overlooked.  

Challenges and Opportunities  

Despite progress, true sustainability remains a challenge. Fast-fashion brands face scrutiny over their environmental impact, e-commerce battles emissions-heavy logistics, and luxury retailers contend with balancing exclusivity and accessibility. However, these challenges spur innovation, from closed-loop production systems to bio-based materials, paving the way for long-term change.  

Retailers who embrace sustainability this Christmas are poised to resonate deeply with consumers. By showcasing their commitment through meaningful actions—whether it’s reducing waste, offering sustainable product lines, or enabling circular shopping—brands can build trust, loyalty, and long-term relevance. In a season of giving, sustainability isn’t just a legislative obligation or a selling point; it’s a moral imperative that aligns with the values of modern shoppers.  

Final Thoughts

It’s no news that the golden quarter can make or break a retailer, with concentrated sales opportunities capturing up to 40% of total annual revenue between October and December.   

Black Friday is the first big moment of certainty, a rigorous test of their capabilities—from pricing and promotions to supply chain agility in managing large spikes in demand.

From there, the focus shifts to peak Christmas trading, offering a prime opportunity to sustain the consumer excitement and momentum sparked during Black Friday. However, in today’s unprecedented economic climate, plagued with weak consumer confidence and heightened caution, retailers must work harder than ever to navigate this delicate landscape. 

A successful peak for 2024 will hinge on achieving a delicate balance: driving value-led activity to attract cost-conscious shoppers, whilst safeguarding profit margins. 

A well-rounded festive proposition is essential—not just the right product mix at competitive prices but also delivering value-add initiatives that set a retailer apart. These include a seamless shopping experience with convenience and flexibility, meaningful sustainability efforts, and the excitement sparked by standout marketing campaigns.

While Christmas planning begins as early as January for retailers and many key decisions are already locked in, the race is far from over. With Christmas falling on a Wednesday this year, supply chain planning faces added complexity. Retailers who have invested in technology will reap the rewards with their products being in the right place at the right time, ensuring no money is left on the table.

In the final countdown to Christmas, reactivity and agility will be key. Prioritising availability, relevance, and responsiveness will ultimately determine which retailers come out on top this season. Who do you think this year’s winners will be?