Retailers are set for tough sales comparisons this Christmas due to the ongoing economic gloom and the lack of pre-VAT incentives unlike last year, though there are a number of ways that these problems can be overcome.
Over the last 12 months, consumers have cut down on non-essential spending but the grocery sector has continued to perform well, with growing numbers of shoppers favouring either discounted stores such as Aldi and Lidl or upmarket options including Waitrose.
Described as the “two-nation divide”, this trend has seen many grocers increasing their multichannel presence and in-store digital offerings in order to encourage customers to spend with them.
Waitrose recently launched self-service check-outs at its stores in the hope of improving customer service and reducing queue times, and has also sought to improve its online offering in time for the festive rush.
“Our customers are already shopping online for Christmas, helping drive a 67 per cent year-on-year uplift in turkey orders and party food bought through Waitrose.com,” a spokesperson for the supermarket told Retail Gazette.
“This Christmas is predicted to be our biggest ever for online orders, with internet sales expected to increase more than 250 per cent compared to a normal month.”
Reducing waiting times during the season is vital for retailers, particularly those in the grocery sector, as many customers will simply abandon baskets if left to wait too long, claims Cindy Etsell, Head of Retail at business analytics software firm SAS.
Implementing self-service tills on their own is not enough and support and assistance from employees is essential, she explained.
“If this is done correctly, then this extra service will positively impact customer service and strengthen loyalty.
“Self-service tills will also act as a cost-saving tool for retailers in that more customers will be served, fewer ‘normal’ and manned tills will be required and staff will be freed up to assist customers on the shop floor, improving customer service.”
The past year has seen a large number of new technology products introduced into the retail industry, which has boosted in-store operations as well as logistics.
A number of retailers, notably John Lewis, have introduced in-store Wi-Fi to help improve the customer experience and allow shoppers to browse and compare products online while accessing customer reviews and sharing information in real-time with friends, a move Etsell says will further boost sales during this unpredictable economic climate.
“With technology like this, retailers can encourage footfall and sales even further, and the first to trial this service in the UK will be a step ahead of the game,” she commented.
From a logistics viewpoint, a number of retailers are offering services which significantly reduce delivery times, with internet start-up Shutl providing a new high-speed service which allows online shoppers to receive their purchases within a mere 90 minutes. Aurora Fashions is among the companies benefiting from the system.
“Logistics are so important; they are everything in this modern world,” Louise Cooper, Markets Analyst at stockbroker BCG Partners, told this publication.
She added that the retailers that understand the importance of a fluid supply chain network will undoubtedly improve their profit margins this Christmas, despite consumer caution over delivery failure due to last year’s logistical pressures.
“When people have less money to spend, they are more likely to be prepared and planning and organisation generally comes earlier when people are cautious over finances. As a massive retailer, Tesco knows how to do logistics, while others such as Argos, whose shops look stuck in the 1980s, do not.”
Argos does provide next-day delivery, but Cooper questioned its set-up, saying: “Argos cannot deliver next-day and people want that service; as a consumer I know some retailers are reliable and some are not.”
While research released yesterday from online payment company PayPal suggested that bargain hunters are flocking to online shops in the hope of securing a good deal, the analyst explained that traditional stores should also capitalise on this interest in value for money.
“Companies that are putting on good sales and that are very aware of what customers want are doing really well,” Cooper added.
“Debenhams for example has had a lot of promotions this year and, despite ongoing discussion about the ‘death of the department store’, they are doing well in this downturn as a result.
“Now, people will search the newspaper for vouchers and coupons and, while traditional marketing campaigns such as TV ads are effective, retailers that are aware of this growing trend will do well this year.
“Those who know what people want will grow massively as people are tighter with their money but more specific on where they spend. Huge sales of iPads and iPhones show that people are still willing to spend on what they want and need.”
So it seems that this Christmas can yet prove a strong one in terms of sales performance on the high street and online, and that consumers are eager to splurge after exercising caution throughout the year, though the full effect of retailers’ efforts will not be entirely clear until the first few weeks of 2012.