What Can Christmas Trading Tell Us About Changing Shopping Habits?

26 Jan, 2017

So the dust has settled on another Christmas trading season and no doubt you’re still knee deep analysing your own brand’s performance over this vital trading period.

But what about the bigger retail picture?  What were the overall trends evidenced at the back end of 2016 and what can these tell us about what’s in store for 2017? We’ve been scouring the very latest data to answer those very questions.

Retailers Enjoyed a Solid Christmas, with Like for Like Sales up 1%. 

Figures compiled by the British Retail Consortium show that sales rose 1% in December from the year earlier, on a like-for-like basis – an improvement on November.

According to Paul Martin, UK head of retail at KPMG, “retailers were helped by the timing of Christmas, which fell on a Sunday, giving shoppers the chance to use the weekend for a final dash to the shops.”

Barclaycard, which processes about half the UK’s card transactions, reported a strong end to the year too.  Their figures – which include spend on leisure activities and petrol as well as on retail spending – revealed that Q4 2016 saw the highest year-on-year growth in consumer spending for four years.

However, there are some warning signs in the figures. According to retail analysts Springboard, which tracks shopper numbers, the number of people visiting British high streets and shopping centres was down slightly over December as a whole, with more significant drops on both of the traditional post-Christmas sales days of Boxing Day and New Year’s Day. Furthermore, according to Barclaycard, some of this rise in spending was down to higher prices, rather than because consumers were buying more in volume terms. 

High Street Sales Boosted by Brexit Tourists.

Some of the recent positive retail sales performance is down to a relatively recent phenomenon – Brexit tourism.

Overseas shoppers are being attracted to the UK by the extra spending power the weak pound is giving them.  This has been a particular boon to the luxury industry – as we’ve mentioned in earlier articles, luxury watches in the UK are 20% cheaper than anywhere else in the world at the moment.

According to payment provider Worldpay, sales from foreign credit cards on the British high street are up 22% year on year. Shoppers from Hong Kong (spend up 69% yoy in December), the United Arab Emirates (up 31%), and China (up 24%) have been the main drivers behind this growth. 

Evidence of the Growth of the Experience Economy.

Barclaycard’s analysis shows that we’re spending less on ‘things’ and more on ‘experiences’ –  pubs and restaurants fared much better than bricks-and-mortar stores, with clothing sales the hit hardest.

The growth of the experience economy was also highlighted by Visa in their latest figures, which saw spending rising year-on-year on hotels, restaurants, bars, recreation and culture, whilst spending on clothing, footwear and household goods fell.

It’s a trend also noted by retail analysts Springboard. “Our retail pound is being spread thinner. People are choosing to go out for a meal rather than buy a sweater,” explained Springboard’s Diane Wehrle. “People are buying more online and when they do go out there’s more focus on leisure spend. They might combine click and collect with a coffee or a meal or a visit to the cinema. It’s a more rounded experience.”

Online Sales Growth Still Strong. 

Not only is there evidence that leisure spending outperformed retail spending this Christmas, there’s also evidence that online retail spending outperformed offline retail spending.

This is backed up by Visa data that revealed that online spending rose 5.5% in December, while face-to-face spending was up only 0.7% on the year.

A post-Christmas study by performance marketing firm HookLogic found the number of unique ecommerce shoppers in the UK increased 12.4% in the period spanning 7th November to 31st December vs. the same period last year. That would suggest that online sales growth was driven by a greater proportion of people shopping rather than those who already shop online spending more.

The Rise of Smartphones, Decline of Tablets.

Mobile commerce accounted for much of this online growth, with sales made via smartphones increasing 47% year-on-year in December.

Clearly, much of that growth came at the expense of shopping on desktops and laptops, but it also came at the expense of shopping on tablets, which saw a fall in sales year-on-year of 3%. This was reflected in the surge of mobile sales accounted for by smartphones – up from 39% in December 2015 to 54% last December.

It seems that not only are sales of tablets falling, but usage of existing household tablets is falling too – at least for shopping.

Logistics Becoming a Differentiator. 

Basics such as having the stock available, and getting that stock to the customer, are becoming key differentiators.

According to late December 2016 research by YouGov for supply chain-related firms JDA and Centiro, 49% of online Christmas shoppers experienced problems with the timing or non-delivery of their ecommerce purchases this year, up slightly from prior years. Moreover, 10% said they never received an order that a retailer or delivery company said had been delivered.

Clearly, poor order fulfilment is going to drive consumers elsewhere – nearly 80% of the study respondents said it was likely they would switch to an alternative retailer as a result of a poor ecommerce experience. Those that have the stock, and can deliver it quickly, consistently and on time will have the edge in this hugely competitive field.

What can Christmas 2017 tell us about Christmas 2018?

It is clear for Christmas 2018 that retailers will have to work harder to firstly, offer more seamless shopping experiences online, especially on mobile, secondly, offer instore brand experiences that can really entice shoppers to make the visit to the shops during the busiest time of the year, and thirdly, ensure that the digital to physical fulfillment is as frictionless as possible for consumers.