In the run up to Christmas, the retail industry goes into overdrive. Many cities authorise shopping malls and retail properties to remain open later, chains take on extra staff to cope with the rush of consumers and internet retailers prepare to work around the clock as shoppers attempt to find the perfect presents for their loved ones at this festive time of year.
However, this Christmas is not exactly the run of the mill season seen most years, as the recent exit from recession has left consumers with a rather flat sense of the holiday spirit. The majority will be anxious about keeping costs low, especially with rumours abound regarding a further dip in the economy at the start of the New Year.
Despite the huge increase seen in sales made online and using smartphones, Deloitte has predicted that retailers in the UK will see only a 1 per cent rise over the Christmas season. Although online sales are expected to jump by 17 per cent, made up of £330 million worth using smartphones and £500 million worth of transactions made via tablet computers, the current rate of inflation – 2.7 per cent – implies that the actual volume of produce purchased will fall rather than rise.
Deloitte also predicts that the “click and collect” method of marketing will prove immensely popular this Christmas, as consumers who work during shopping hours will choose to reserve their gifts online in order to ensure their purchase will be successful. They will then be able to visit the shop their item is stored at to collect it at a time of their choosing.
Click and collect is gradually becoming the most successful retailing tool in the UK, as it centres solely on consumer convenience. Rather than having to trail around the shops for hours on end, consumers can simply log on to the store’s website and pay for their purchase using a credit or debit card. This method of shopping also means that consumers do not need to wait in their home all day for the postman – one of the most hated aspects of internet shopping for many!
Smartphones will also play a major role in shopping this Christmas, with Deloitte estimating that £3.2 billion, or at least 10 per cent, of transactions made over the festive period being influenced by the pocket sized technology. This does not even include actual sales processed using them, but instead focuses on advertising, social networking and store apps.
While the rise of only 1 per cent in sales volume may put a bit of a damper on British retailers’ festive spirits, Deloitte’s UK head of retail Ian Geddes maintains that any rise at all is positive news for the retail industry in this country.
He says; “Deloitte remain cautious on the long term outlook for UK retail, but there are more reasons to be optimistic than pessimistic this Christmas.
“Consumer confidence has gradually improved over the course of the year and despite the recent increase in inflation, it is much lower than it was 12 months ago easing the pressure on households.
“Whilst it is not certain whether this will translate into higher spending, with consumers continuing to show a desire to save, we believe it will be enough to generate modest growth.”
However, Mr Geddes does admit that the recent price hikes for food and drink items will have a significant impact on the retail industry this Christmas, with other product categories potentially suffering as a result.
A soggy summer has led to poor crop harvests, which has bumped up the prices of fruit, vegetables and grains. As this includes animal feed, the prices of meats such as pork and poultry are also set to rise steeply so farmers can recoup the high cost of feeding their flocks.
Yet Mr Geddes insists that clever retailing will still ensure that chains and independent store owners will have a successful lead up to the big day itself, as consumers seek high standards of customer service as well as low prices at this time of year.
He concludes; “Increasingly, we are seeing examples of certain retailers performing strongly and others weakly within the same sector.
“Shoppers are responding to those retailers that combine the right products with exceptional customer service across all channels, dynamic and exciting online and mobile sites and a brand they want to be associated with and invest in.”
Do you think Christmas sales will defy expectations because it is the first Christmas in several years that has not fallen in a recession, or do you agree that consumers will prove unwilling to spend heavily in the festive season? Are you planning to splash out this Christmas, or are you going to save for next year?
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