Housewares Business-to-business magazine for housewares retailers and their suppliers
The British Retail Consortium (BRC) has released a list of ‘Festive FAQs’ full of stats, facts and predictions for the Christmas trading period.
Here are answers to some of the key questions that the retail industry has about business this year’s festive season:
How important is Christmas to the retail sector?
December is the biggest month for shopping in the UK. In 2015 it accounted for over £42 billion and 12% of the year’s total sales.
That’s not all Christmas shopping, but it shows how critical the trading period is to many retailers, and why they invest so much time in attracting customers with advertising, diverse ranges and appealing promotions in-store and online.
What are your projections for Christmas spending?
Sales growth has been pretty sluggish this year as competition has kept prices falling, whilst growth in consumers’ incomes has not compensated.
However, more recently sales growth has picked up, with October posting 2.4% growth in total sales – the highest figure since January. We expect that upturn to carry through into Christmas, with total sales posting growth over last year. However, we can’t be sure until we compile the December figures early next year.
What are conditions like for customers at the moment?
Now is a good time to be a shopper in the UK. Competition in the industry has meant that prices have been falling for more than three years, and retailers are constantly innovating to provide great service. A rise in prices is expected next year as a result of the devaluation but as yet, we’re not seeing increasing costs of imports feed through onto the shop floor.
The uncertainty surrounding the economic outlook has dented consumer confidence in the latter half of this year. The GfK Consumer Confidence fell by 5 points to -8 in November. This compares with +1 in the same month last year. However, subcategories within this index suggest that consumers are still positive about making major purchases, although less so than at this time last year.
How much will people be spending?
Research from VoucherCodes.co.uk parent RetailMeNot and the Centre for Retail Research found that in terms of UK Christmas spending, the average home will splash out £809.97 on average.
This will go towards food and drink, travel, decorations and gifts, with the latter accounting for 58.5% of the budget.
Smartphones and tablets will account for 42.3% of UK Christmas spending where online is concerned: far greater than other European companies.
What will be the busiest shopping days in the lead-up to Christmas?
The way people shop at Christmas has changed in recent years.
The introduction of Black Friday to the Christmas trading period has meant that Christmas shopping now begins in November and there are two peaks in trading activity.
One is in the lead up to the Black Friday/Cyber Monday weekend; the other is the Christmas peak, before tailing off dramatically at the start of the sales period, especially for food.
Non-food has a steadier sales build-up, while food sales tend to peak significantly in the week before Christmas.
With Christmas falling on a Sunday this year (compared with Friday in 2015), we would expect many consumers to be food shopping up until the Friday in the Christmas week, with their gift shopping been finalised earlier that week, if necessary.
What has footfall been like?
Our October Footfall Monitor showed footfall was down by 0.4% – an improvement on the previous month. Until recently, the trend in footfall has generally been positive in retail parks, and falling on the high street and shopping centres.
However, in 2016, we have seen footfall growth slow in retail parks, and turn negative in recent months, while footfall on high streets has been positive in three of the last six months.
As ever, there were widespread variations across the UK, with the North & Yorkshire being the only region to report footfall growth, up 0.5%. Northern Ireland reported the greatest decline (-5.3%).
In the same way that sales build up as Christmas gets closer, footfall is expected to follow a similar pattern in the final few weeks.
With Christmas on a Sunday this year, consumers are likely to try and finish their shopping the weekend before Christmas, with the week of Christmas being left for the last-minute gifts.
How important will online be this Christmas?
Our October Online Retail Sales Monitor showed online growth of 11.1%, marginally ahead of the 12-month average of 10.8%.
We expect more people to click into Christmas than ever before this year, as online continues to be a steady contributor to non-food growth.
In October 2016, online sales represented 22.2% of total non-food sales, against 21.1 % in October 2015, meaning one in five pounds was spent online.
A total of £5.8bn was spent online in December 2015, according to the Office for National Statistics (ONS).
The most successful retailers have invested significantly in their multichannel offer, so that customers have flexible and convenient ways to shop, whether at home, in-store or on the move.
The rapid rise of tablet and smartphone ownership means that m-commerce is once again going to feature heavily this Christmas.
When will the Christmas sales start?
Christmas Day itself is now a key shopping day thanks to e-commerce, social media and rocketing smartphone and tablet ownership.
And many retailers will respond to that demand with early offers and a head start on the sales period – as early as Christmas Eve, for some.
Is Boxing Day a bigger shopping day than pre-Christmas?
No. Post-Christmas is substantially less busy than pre-Christmas trading.
Will there be many administrations in the New Year?
We don’t make projections in this area, but there will always be some retailers for whom the sums don’t add up, especially after the crucial Christmas trading period.
With cost pressures building in the supply chain, as well as pressure from the NLW (National Living Wage) and business rates impacting bottom lines, the 2017 retail environment is likely to be challenging.
