Shoppers are more sophisticated than ever and on the front foot when it comes to getting the best possible value. It’s hardly surprising therefore that, having seen certain retailers slash their prices before Christmas in previous years, they expect those same retailers to do the same every year. They delay their purchases at these stores, the retailers panic and drop their prices. It has become self-fulfilling.
What is particularly worrying this year is that the pre-Christmas sales do not always seem to have delivered the necessary volume uplifts. While some retailers may attribute this to weak demand, what is interesting is that many of the retailers that did hold their nerve on price appear to be the ones that have seen sales perform well.
This perhaps suggests a shift in shoppers’ perceptions of value. Clearly, a track record of pre-Christmas discounting undermines a retailer’s ability to charge full price, but it seems it may have gone further than that. It’s as if discounting has started to erode shoppers’ broader confidence in retailers that are known to discount before the 25th. How can a shopper judge what is, and what isn’t good value in the run up to Christmas? And shoppers that paid full price the day before a flash sale can easily be forgiven for feeling a little disappointed and let down.
We know from the likes of Next and Superdry that a Christmas strategy built on confidence in product and fixed sales periods can be a winning formula. For those that have deviated from this, the annual test of nerves is likely to continue. Christmas is of course when retailers make the lion’s share of their money, so a toxic combination of weak sales volumes and low margins in the so-called golden quarter surely cannot be sustainable.
In terms of other winners, we anticipate that strong ranges and great customer service have once again delivered for retailers like Jo Malone and, if shoppers queuing outside stores offer any indication, Pandora must have had a strong Christmas.
Omnichannel was key for Christmas 2013, with retailers across the board reporting double-digit uplifts in online sales. Click and collect services proved highly convenient for shoppers and allowed retailers to deliver full ranges to shoppers served by smaller stores. Online retailing as a whole has also been boosted by the prolific adoption of smartphones and tablets over recent years.
Savvy will be publishing its full Christmas review on 16 January.