Christmas parties, crackers, mistletoe, garish jumpers, great movies, mince pies and of course an extra hole on the belt buckle. Christmas is a time of traditions, and part of its charm is knowing what’s coming every year.
This is also true in the retail sector. The torrent of Christmas shoppers in the run-up to the big day has been around almost as long as Christmas presents. Yet, as with many long-standing traditions this year, this could be on the verge of change.
Last week’s Black Friday event, which has now become a tradition in itself and signifying the start of the festive shopping season, was a mixed bag at best. According to Ipsos, footfall edged up this year 0.1 per cent while Springboard reported a 3.6 per cent downturn, all while sales growth slowed.
“Consumer hesitance around over-spending will have led many to eke out their Christmas budgets”
This far-from-outstanding performance follows some of the highest declines in retail sales on record throughout October, preceding a relative rebound in the first weeks of November. With such mixed signals, retailers are asking: Are people saving their cash for the pre-Christmas rush, or are they saving their cash altogether?
According to a survey conducted by the Principality Building Society, a “fifth of adults agree that external events like Brexit have made them less confident about spending money at Christmas”.
It’s clear that external factors are influencing high street shoppers’ willingness to spend, but it is unclear whether this is a long-term shift or whether shoppers’ wallets are in hibernation temporarily.
“Consumer hesitance around over-spending will have led many to eke out their Christmas budgets, buying gifts – for themselves as well as others – before, throughout, and right up to the big day,” Flixmedia’s chief executive Scott Lester told Retail Gazette.
“October may have been a month of ‘dismal sales’, but this should be seen as a short-lived spending trend rather than an indication of longer-term decline. Black Friday marks the start of peak season in the retail calendar and in many shoppers’ minds, Christmas is here.”
Peak season it may be, but signs are emerging of a very different approach to festive shopping. A shake-up of the way people do their Christmas shopping needn’t spell disaster for retail. With the strides made in distribution capabilities over the last 24 months, avoiding the chaos of the high street is becoming increasingly attractive.
Certona’s chief executive Meyar Sheik said: “A general trend we’ve been witnessing over the last few years has been that customers are delaying their Christmas shopping much later, waiting for Black Friday and even pre-Christmas sales as they hold out for bargains.
“One of the major factors driving this trend has no doubt been the convenience of online services.
“More and more people now turn to online stores to finish their festive purchasing, knowing that offers like next day delivery can be relied on to ensure gifts arrive ahead of the big day.”
“The rhythm of the ‘street’ was dictated by seasonal and key calendar events in the past that needed huge pre-planning”
Although the effect the wider economy is having on spending habits may prove to be temporary, the causes of this economic turmoil are more long term.
Should retail sales bounce back over the Christmas period, there are other factors at play which are poised to disturb retail traditions throughout the new year.
Professor Christian Edger of the Birmingham City Business School believes the lacklustre sales in the run-up to Christmas are symptomatic of a wider change.
“It’s part of a longer time decline on the high street,” he said.
“The rhythm of the ‘street’ was dictated by seasonal and key calendar events in the past that needed huge pre-planning.
“Digital campaigns, driving on-line spend has completely undermined this rhythm through ‘drops’, special promotions, clearances, multi-deals which occur all year around.”
For such an adaptive and flexible sector, changes in shopper behaviour have been dealt with before and will surely rear their head again. But at such a crucial time of year for the sector, any retailers relying on tradition alone to drive their final quarter revenues may want to ask Santa for some help.
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