Lisa Hooker, head of consumer markets at PwC, said: “There have been a range of different takes on how Christmas trading was for retailers and lots of companies have published their results. Was it really as bad as the headlines have made out? We have been busting some of the myths around Christmas performance.
Was it the worst Christmas in recent times?
“Trading was subdued in the run up to Christmas, but spending held up and there was a strong last week. Rather than stand out categories, there were winners and losers within each segment”
Winning strategies included
• Knowing what makes your customers love you, and giving them more of what they want. Some of the biggest fashion successes came from brands that maintained their authenticity or simply offered the best value fast fashion.
• Finding ways to keep your customers with you, even when wallets are squeezed. It’s no surprise that the most successful supermarkets this Christmas invested in value ranges, while also innovating in premium own label to allow customers to treat themselves. And there was also outperformance from some retailers that offered credit to ease the burden on stretched shoppers.
• Investing in your people as knowledgeable and motivated colleagues was a common thread amongst retail’s winners.
“As we were only cautiously festive, with the majority of consumers saying they spent similar or less than last year, we saw a rise in practical presents such as books, toys which are collectible or educational, sportswear and travel equipment did well, although this did not extend to things like stationary. Personalised gifts and brands with strong appeal also performed well.”
Is the high street dead?
“There is no getting away from the fact that high street footfall is in decline. Over the last four years prior to 2018, the decline was around 1% on average. This time it fell by just over 2% and the amount of people coming from the high street into stores - known as the capture rate - also fell by 1% over Christmas.
Rise in click and collect
“But customers want well-located and well-staffed stores, as well as online. Consumers told us that half of all their Christmas shopping is still done in stores, and in categories where experience or proximity are key (such as hobbies and pocket money toys). Retailers that understood this prospered. Multichannel retailers credited their stores for some of their online success, with a quarter of all online shoppers ‘click and collecting’.”
Was it really an online Christmas?
“Online shopping is the norm with current penetration at 23%, which is expected to grow to near 30% by 2023. However data suggests it was not quite the online Christmas that was expected. We have seen a gradual decline in the rates of growth online. In the last quarter of the year, the growth rate has declined from around 10% in 2016 to 5% in 2018 despite people being more confident that online retailers will deliver on time even when ordering close to Christmas.”
“Data also indicated no growth in the number of consumers shopping for groceries online. The online complaints are now more about finding products on sites than delivery problems.”
Does Black Friday hurt Christmas?
“While Black Friday 2018 consumers told us they would spend a similar amount to last year, they also said it is more about buying for themselves than for Christmas presents, particularly men whose top purchase is electrical items.
“Retailers are also getting wiser and increasingly returning to full price the following week, as December remains the most popular month for Christmas shopping. A clear message, particularly for those with blanket promotions, was the need to inject “newness” into the week following Black Friday to get people back shopping and justify a return to full price.
Outlook for the year ahead
“As we head into 2019, there will be more challenges ahead. Consumers are tightening their belts, cost headwinds are not abating, the relentless channel shift online will put more pressure on the high street, and that’s without even mentioning Brexit.
“But we believe there’ll be an opportunity for forward-thinking retailers to steal a march on their competitors, by investing in their people, their proposition and their operating model (including stance on sustainability and activism), and embracing technology, partnerships and social ecommerce to enhance their offering.
Notes to editors
PwC analysed data from the British Retail Consortium (BRC), SpringBoard, Kantar, and Global Data.
PwC also analysed data from its consumer sentiment survey which spoke to 2053 consumers on 19-21 Dec.
For more information, please visit https://www.pwc.co.uk/industries/retail-consumer.html
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