The brexit christmas
As early as July, when economists and commentators were still trying to absorb the results of the EU referendum vote, headlines appeared along the lines of “How Brexit stole Christmas”. Four months on, with retailers’ Christmas campaigns in full swing, is this prophecy coming to pass?
Consumer confidence seems to be resilient. Despite the aftershock of the Brexit vote, a PwC survey from last month shows that people are feeling confident about their disposable income over the next 12 months. More consumers expect to be better off across the UK, although Londoners are feeling the most buoyant with 40% expecting to see an increase in disposable income.
The outlook for Christmas remains “positive” the report says with Friday 23 December expected to be the biggest shopping day of the season. Even if there is some belt tightening, it seems consumers are reluctant to sacrifice Christmas food and drink spend - only 13% said they will economise on Christmas dinner.
Research from Mintel shows similarly favourable conditions. Sales will grow 2.5% in December to reach £42.billion, it says. And the appeal of online is growing, with one in five Brits planning to shop online more for Christmas in the hope of clinching a bargain or to avoid the bustle.
The New West End Company, which represents 600 stores in London’s Oxford Street, Regent Street and Bond Street, highlights some important trends and strategies from retailers looking to maximise sales this Christmas. Its Christmas Tracker report echoes others in forecasting a period of festive cheer rather than a period of penny pinching. Overall, it predicts that in the six weeks running up to the big day takings will be up 1.6% for its retailers, hitting a record of £2.34 billion (average takings per day being £51.1 million). Its bullish mood comes from high hopes of a surge in international sales as a result of the weakened pound, and a possible boost in domestic demand as Brits are put off by the raised cost of travelling abroad.
Perhaps most importantly though, retailers are adjusting to changing shopping habits. The report outlines how creativity and technology are being ramped up to strengthen the omnichannel offering, so visually attractive stores pull customers in while in-store digital technology and personalised services allow them to shop whichever way they choose. Karen Lord, Head of Branch at John Lewis Oxford Street highlights how stores ‘have a new role as a source of inspiration, entertainment and differentiation for customers - transforming a shop visit from a mere transaction to an experience or day out.’
While there seems to be plenty of Christmas cheer about spending habits, are ‘mega sale’ shopping days such as Black Friday or Cyber Monday still significant? Though they were regarded as something of a damp squib last year – perhaps partly down to the unseasonal weather – indicators show they are far from being sidelined by retailers.
Recent Royal Mail research revealed that nearly half of retailers (409 senior retail decision makers were surveyed) expect Black Friday to account for up to 50% of their Christmas sales this year. Many retailers are using this annual sales event to discount brand new products as part of a planned product entry strategy. Around one in five retailers plan to take part in the Black Friday sales event and far from it being a 24-hour shopping-fest, retailers will actually start discounting in the days preceding it.
On the demand side, a separate survey by PwC released earlier this month indicates that three fifths of consumers (57%) planning a purchase are holding off until Black Friday/Cyber Monday in the hope of getting a better deal. A whopping 77% plan to grab these bargains online.
For now, it seems Brexit hasn’t stolen Christmas. But the prospects for a ‘happy new year’ are still under much debate.