After a challenging Christmas trading period, some of the UK’s favourite retail brands are facing the music in the early weeks of 2014. Retail brands around the country experienced difficult conditions in the weeks leading up to Christmas, with few outstanding performers emerging from the competitive trading period. The British Retail Consortium reported that shoppers spent 1.8 per cent more in December than a year earlier, a fall from annual growth of 2.3 per cent in November. Sainsbury’s CEO, Justin King, even went so far as to pronounce the 2013 Christmas trading “very tough”. With holiday sales figures flooding the headlines, it seems an opportune moment to explore how UK retailers fared in the days and weeks before Christmas, and reflect upon the importance of the in-store experience.
Leading department store Debenhams has been firmly left out in the cold this year having issued a shock profit warning, swiftly followed by the departure of the retailer’s CFO in the first week of 2014. Debenhams’ poor sales performance is an indicator of the retailer’s failure to put consumers at the heart of its business. The retailer will have a major job to do to entice consumers to choose to shop in its stores over its rivals as we enter the New Year, and the key to achieving this will be creating an appealing customer experience. Debenhams has been focusing on upgrading and modernising its stores over the past couple of years, but if customers don’t actually enjoy the experience and trust the brand, none of that matters. Positive customer experiences would translate into positive sales figures for the ailing brand.
High street stalwart Marks & Spencer’s has also emerged to be on the losing side this Christmas. All eyes will be on the retailer in the coming weeks amid fears that the department store could also miss its profit targets. An unhealthy sales report would mean more pressure on the retailer’s beleaguered CEO, Marc Bolland, who will have been hoping to use the festive season as an opportunity to turn around years of poor clothing sales. It’s clear that the brand’s strategy of heavy discounting designed to spark a late surge in spending failed to pay off. The high profile, high budget Christmas marketing campaign, which included celebrities including Helena Bonham-Carter and Rosie Huntington-Whitley, has also failed to pay dividends for the beloved British brand.
Retailers can have the latest IT systems, the best supply chains and even the lowest prices, but if customers don’t actually enjoy the experience and trust the brand, none of that will matter. Christmas sales figures are a telling indication of this. Retailers need dedicated, knowledgeable brand representatives, who can make a connection with consumers and leave them with a memorable impression of both the product and the brand. This is where Debenhams would have won many fans at Christmas. With the support of effective brand ambassadors on department floors, brands can significantly increase sales by giving consumers that extra nudge and ensuring the journey results in a purchase.
On a brighter note, Next, Britain’s second-largest retailer has emerged as a major success story. The brand’s shares increased nearly ten per cent to a record £60.80 as it reported that strong sales in the lead up to Christmas. As was the case with most retailers, booming internet trade lifted sales significantly. Next’s healthy Christmas numbers were revealed after John Lewis and House of Fraser also reported seasonal boosts, complimented by similar thriving online sales. The two leading department stores also managed to record growth in the seven weeks to Christmas, with like-for-like sales on the rise for both brands. John Lewis’ strong results point to the strength of its Never Knowingly Undersold commitment that has inspired genuine affection in its customers and the above the line advertising has played a huge part in its success too. YouGov research indicates that during the Christmas period John Lewis beat all retailers in achieving the greatest awareness and buzz around its ad, with 45 per cent of people recognising it.
In 2014 retailers will need to focus on enhancing the customer journey. By inviting and retaining shoppers within the retail space, brands can work to create appealing and engaging shopping experiences that present customers with a combination of care, quality and in-store ambience at point of purchase. It’s time for brands to understand that building trust actually needs to start on the shop floor. Unprecedented promotional activity in the clothing market, along with declining high street footfall, continued pressure on household incomes in an uncertain economic climate combined to make it one of the most competitive retail trading periods in recent history. These factors alongside the mass move towards online purchasing have made the Christmas sales period one of the most interesting to watch. City traders can take encouragement from the stellar performances from stores like Next and John Lewis as they await the next wave of Christmas trading reports over the coming weeks.