CHRISTMAS 2024, DATA, WEATHER AND TRADITIONS

From dates to hot chocolate, here’s how retailers can turn uncertainty into opportunity with Artificial Intelligence

We analyzed Italian consumption trends and showcased the role of AI in embracing a Christmas centered on sustainability and quality

Christmas 2024 arrives amid economic uncertainties, with consumer habits adjusting to complex market conditions. According to the latest survey conducted by Confimprese in collaboration with Jakala, Italian families, increasingly focused on savings, are grappling with a drop in purchase volumes, down 0.4% compared to the same period in 2023.  24% of households reported a reduction in purchasing power between June and September 2024. This trend, which was already visible between 2022 and 2023 with a 1.7% decrease in volumes, is somewhat offset by a 7.9% increase in overall spending, driven by inflation, which pushes prices higher and forces consumers to spend more while purchasing less (source: NielsenIQ). 

In this scenario, Christmas could provide a much-needed boost for the retail and foodservice sectors, with hopes that the holiday season will reignite consumer spending despite the challenges. But what can retailers expect? 

“Retailers can’t constantly control consumer behavior, which is increasingly influenced by macroeconomic factors and other variables,” says Andrea Paparella, our Sales Director. “However, they can prepare in advance by accurately forecasting needs to minimize inefficiencies and maximize margins, even in the face of lower sales.” 

Pandoro, Panettone and dates: Holiday staples, but watch out for the variables 

Christmas traditions repeat year after year: according to our data, for example, dates see a 600% increase in consumption compared to the rest of the year. Other iconic products like pandoro and panettone are on sale from November to February, with a peak of +189% during Christmas week. But it’s not always that simple – other variables can influence sales trends for these products. For instance, internal data shows that during bad weather, pandoro sales drop by 15%, while panettone sales increase by 10%. 

While some dynamics are common across the entire retail sector, other factors can vary based on weather, promotions, store location (even within the same region), local events, and holidays. The data presented reflect findings from the analysis of specific contexts, but different dynamics could emerge when examining other scenarios, highlighting the importance of tailored and context-sensitive approaches.

Ready Meals and Home Cooking: The Perfect Balance of Tradition and Innovation During the Holidays 

To confirm this, we conducted a study comparing Northern and Southern Italy, highlighting a stronger interest in ready meals in the North. In fact, ready meal sales rise by 93% during the holidays in the North, likely reflecting a preference for quick and convenient meal solutions. In the South, however, traditional homemade Christmas meals dominate, and ready meal sales drop by 67%. 

How Can Retailers Prepare for an Uncertain Christmas? 

During the holidays, retailers know that certain products experience a spike in sales. Let’s start with the basics: Coca-Cola, for example, sees a 40% increase in sales, and digestives rise by 28%, likely in preparation for the holiday feasts. However, sales are influenced by many other factors, such as promotions, weather, and local events. 

Promotions are definitely a sales driver, but during Christmas, they are less effective: the impact on Coca-Cola sales is 36% lower compared to non-holiday periods. Even the holidays themselves can affect overall sales differently: for example, Christmas generates a 19% increase in sales compared to Easter. Now, consider a classic winter product: hot chocolate. Geography plays a significant role in purchase habits, with clear differences between the North and South of Italy. During Christmas week, hot chocolate sales grow by 200%, but weather also adds an additional layer of impact: in case of rain, sales rise by 18% in the North and by 52% in the South. It seems that the combination of bad weather and hot chocolate is irresistible, but each situation must be evaluated differently. 

But that’s not all – local events can also significantly impact sales, adding another dimension to the holiday season. For example, during the patron saint celebrations of San Nicola in Bari (Apulia) on December 6th and Sant’Ambrogio in Milan on December 7th, alcohol sales see an additional 11% increase. This highlights how local traditions also play a crucial role during the holiday season, influencing demand. 

“To know how to navigate the uncertainties of the upcoming Christmas season,” continues Andrea, “the best approach is to adopt an AI system that allows for accurate forecasting of needs, constantly influenced by what the retailer controls (such as promotions and prices) and, most importantly, by what the retailer is subject to externally (weather, holidays, events), at the SKU level for each store. If, unfortunately, the sales trend remains low during Christmas, retailers could still extract value from lower volumes by avoiding the typical excess stock that is then sold off at lower prices and margins after the holidays.” 

Artificial Intelligence to Reduce Waste and Optimize Stock: Our Solution for Retailers 

To better manage sales uncertainties, we’ve introduced Delphi, an AI-powered solution that uses prescriptive models to automate store management. It helps over 300 stores across Italy reduce waste and optimize stock levels, avoiding both shortages and overproduction. As shown by internal data, Delphi has reduced excess stock by 6% for alcohol and by 16% for holiday products. 

“Thanks to Delphi, store managers or central purchasing managers can plan more accurately, avoiding stock surpluses and ensuring adequate availability for optimal service,” says Andrea. 

In a Christmas season marked by economic uncertainty, Italian retailers have the opportunity to strengthen margins through efficient stock management, supported by artificial intelligence. With Delphi, retailers can turn the holiday season into an opportunity for growth and stability, offering consumers a selection that meets their expectations, without the risk of excessive stock and reduced margins after the holidays.