As the final round of mince pies are being eaten and the Christmas decorations return back to their home under the stairs, the nation’s retailers are announcing just how much of a ‘Merry Christmas’ they’ve had.
For online, it’s been a jolly story for many - as expected. Droves of online retailers are reporting double digit growth, with exceptional performance from some pure plays; Boohoo sales were up by 25% to £142.6m and sales at PrettyLittleThing up by 191% to £73.8m.
Overall, online was the winner for another year and this is certainly where customers are shifting their spending. Mastercard figures show that eCommerce spend rose 11.5% in December compared to the same month last year.
Some progressive multichannel retailers have also seen positive results, with the likes of Quiz seeing overall retail sales up by 31.9% in the seven weeks of peak trading, with online revenues up a staggering 119%.
John Lewis also fared well with sales up 3.1%. Although profits are likely to be hit, the buoyant sales figures show that it is entirely possible for traditional retailers to win if they truly embrace the needs of today’s customer through:
The lower performing brands are again the larger traditional high street players who have to deal with the major structural challenges they operate with in a fast changing retail landscape. Whilst Next posted a modest rise in overall sales of 1.5%, there was actually a decline of 6.1% in store sales; it seems their online sales growth of 13.6% absorbed some of this impact.
Debenhams and House of Fraser also suffered. Debenhams’ store sales were down by 2.6% and both department store chains have signalled that store closures are likely to be on the table as they seek to reduce their cost base and the size of their expensive legacy store estate.
I’ve said it before and I’ll say it again (see my blog on why high street fashion retailers must evolve rapidly to survive). The reduction in sales here is in line with the five years of consecutive decline in high street footfall around the festive period; customers are still shopping on the high street, but are demanding not only parity on pricing with online, but an experiential and engaging shopping experience which is enough to entice them away from the convenience of their smartphones.
For 2018, traditional retailers should follow the lead of the likes of John Lewis and focus on delivering excellence in multichannel. Of course, this is easier said than done for many large retail businesses with hundreds of stores, where change is simply happening faster than they can react.
We’ll continue to see customers shifting their spend online so there’s still lots to play for here.
New and emerging mid-market brands will keep rising and this may pose an additional threat to the traditional retailers who are diversifying their multichannel offer, as customers may seek to engage with more distinctive and cutting edge brands - something we’re seeing as an exciting trend in the Shopify world with the rise of brands like Gymshark, MVMT Watches and Kylie Cosmetics.
2018 will be an interesting year. My predictions: more store closures, more mergers and more double digit growth for online.