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The Winners and Losers of Christmas 2018 - Part 2

Monday 25 February 2019 Data Insight & AnalyticsRetail Consultancy

Laura Symes's picture
By Laura Symes

Welcome to the second part of our Christmas 2018 review. You can read part one here.

Now that the dust has settled on the Christmas trading perspective, we thought it was worth taking a step back and looking at the current state of play.

In part one we explored how the grocery, fashion and non-fashion brands got on. In this part we examine the impact of Black Friday and the 'Super Weekend' as well as the changing fortunes of the UK's department stores. 

 

Bleak Friday and the Super Weekend

It’s easy to blame Brexit for the decreased consumer confidence we saw pre-Christmas, but not necessarily accurate - combined with the pressure driven by inflation, consumers are stubbornly clutching onto their spending, albeit not with much enthusiasm. The influx of pre-Christmas discounting had likely distorted December trading patterns as did the days on which both Black Friday (before the last working day) and Christmas (preceded by a long weekend) fell, encouraging consumers to delay spending until the very end, and consequently retailers to discount heavily straight through from November to February.

Mountain Warehouse reported that their total sales were up 20% on Black Friday, and online sales passing £1m on a single day. Retailer-wide, sales then improved in the immediate run up to Christmas. Sainsbury’s’ bleak Black Friday resulted in like-for-like sales down 1.1% due to their dubious decision to reduce their promotional activity across the Black Friday and Cyber Monday period in a cut-throat food market. Next and John Lewis both released a trading breakdown across the period and saw a mirrored decline in spend in the early December lull, so shoppers were certainly holding out until the end.

 

Departmental Chaos

From the mass media coverage, it comes as no surprise that department stores such as House of Fraser and Debenhams grappled through December. Though things didn’t take a complete nose dive for Debenhams, the department store giant started to cut prices that would eat into the first-half years’ profits in a bid to stay afloat. Like-for-like sales were reported to have fallen 3.4% in the 6 weeks to January 5th, yet group digital sales rose 6% amidst the comparable period. The result from the 23 Beales bricks-and-mortar stores saw an increase of 3% in sales payable to outplaying sales of small electrical appliances, although individual store performances varied greatly

And then there is Mike Ashley’s House of Fraser that experienced a 60% trading loss amid the countdown to its first Christmas under new owners.

The department store’s demise has had devastating impacts on more than 600 concessions that fuelled the majority of House of Fraser’s original growth.

The John Lewis and Waitrose Partnership provided some abnormality to the trend with a sales boost in the last week of December that saw sales rise by 11% compared to the same period in 2017. A week prior to this, Waitrose’s sales were down by 11.7% suggesting that fresh food and produce mixed with the early start of clearance sales saved the department store groups Christmas trading results. However, this is not reflective of the chains profitability during these lucrative weeks due to the £40m cost of competing with other high street discount extravaganzas.

To keep up with successful high street retailers, the very concept of a department store needs reviewing, successful brands need a crystal-clear proposition – what do they stand for? What do they sell? In a competitive landscape packed with specialists and Amazon playing the role of a generalist, the department store USP of getting small parts of lots of discounted ranges under one roof is no longer the USP it was.

A case in point of a clear and compelling proposition is Selfridges. The star of the high street saw sales increase by 8% in the 24 days to Christmas and received a staggering 1.5m online customers by lunchtime on Boxing Day. Being one of the first retailers to reveal their impressive ‘Santa Rocks’ window displays and following a £300m revamp of their Oxford Street store, Selfridges outperformed the struggling market. These initiatives show that engaging your customers positively impacts performance.

And in an often-unreported sector at Christmas we saw retail outlets perform well, with the Icon Outlet at the O2 opening just prior to Christmas with 45 new specialist and designer stores, and London Designer Outlet (LDO) at Wembley Park celebrating its best trading week ever over the Christmas period with total revenue that increased by 2%.

 

Summary

It’s no shock that the current health of the high street has greatly affected Christmas trading with footfall lower than 2017 and a decline in December’s total retail sales of 1.4%. However, the outcome for retailers wasn’t as bad as many had feared, with some admirable results. Those who traded well had a clear proposition, a seamless on/offline experience and were shining stars before Christmas. The festive period once again proves there is nowhere to hide, showing those struggling in stark relief.

For 2019/20 the timing of the calendar will be crucial – expect a resurgent Black Friday as the event lands on payday but an awkward pre-Christmas spike and run-in as many decide to work Monday the 23rd and move their shopping accordingly.

 

3 Main Takeaway Trends:

Supermarkets were resurgent in Christmas 2018.
Timing is essential, structure your trading calendar to the customer.
Particularly at Christmas, shoppers seek specialists who have a clear proposition, deep ranges and, when they shop online, they do so seamlessly.

 

This is part two of a two part series. In part one we explored how the grocery, fashion and non-fashion brands got on - read it here.

 

Get in touch if you would like to find out more about how CACI can help you optimise your retail network.

Part 2 of 2: Now that the dust has settled on the Christmas trading perspective, we thought it was worth taking a step back and looking at the current state of play.

The Winners and Losers of Christmas 2018 - Part 2