Christmas sales figures reveal challenges and opportunities

In Industry Comment, Industry News On

Recent retail figures over the Christmas period have revealed some of the difficulties the UK retail sector has experienced, as well as some potential areas where retailers can improve.

Loyalty Pro managing director Rob Meakin comments: “Retailers’ Christmas results paint a mixed picture as the likes of Tesco, John Lewis and supermarket chain Waitrose all vied for the customer’s interest during a busy period. The influence of peak retail periods such as Black Friday shouldn’t go unnoticed, however, with retailers fighting against the customer’s reluctance to spend, especially as budgets tightened and prices continued to rise.

“Regular Christmas deals are no longer enough to thrive in the competitive market but the ‘membership economy’, where customers feel part of an exclusive club through personalised deals, can help drive footfall and sales. Securing the customer’s loyalty is the biggest challenge facing retailers in 2018 and a personalised strategy will trump all other approaches.

“A personalised approach can add instant value to each shopping experience, while loyalty schemes can extend the entire journey and help build a long-standing relationship with the customer that encourages growth during all periods in the calendar. It’s also likely the reason why Tesco and John Lewis enjoyed strong festive sales; Tesco’s Clubcard and John Lewis’ membership card enables both to build a long-standing relationship with customers, where they can send them tailor-made deals based on purchasing history over the year. But smaller and more local retailers can also compete by offering their own loyalty schemes that use the latest in customer data analytics and personalised bargains.”

Optimove chief executive Pini Yakuel also commented on the retail figures. “Customers are beginning to buy online earlier in the Christmas and holiday period,” he said. “According to our analysis of customers in the festive season, total order amounts were 32% higher in November than December.

“The growing popularity of Black Friday and Cyber Monday are attracting large orders, but instead of increasing overall sales, this might encourage shoppers to make December purchases earlier at a lower price than they would without the discounts. This December saw a 10% lower order total than in 2016.

“Although heavy discounting can bring in more customers in one instance, retailers must be sure that this adds real value to overall annual revenue. We have found that heavy discounts of more than 30% do not usually encourage customers to make a second purchase from the brand later in the year, unless it is a similarly discounted product. While one-off sales provide some value, brands must focus on getting customers to keep returning to the brand to provide lifetime value.”

Ecommerce consultancy Salmon global head of consultancy and innovation Hugh Fletcher noted the mixed performances of retailers online.

“The Christmas sales figures from retailers this week paints a varied picture of their success, with mixed sales performance across the industry,” he noted. “The retailers who have spent time investing and learning about omni-channel strategies are those that are starting to pull away from the less digitally literate ones, with the likes of Boohoo and Ted Baker revealing strong online sales for the Christmas period, with the latter reporting a huge 35% rise in online sales. The hard work of years of investment and organisational change is now visible, and with these stats there’s no hiding for the digital laggards.

“Retailers should look to those who have had strong online sales as examples, investing time in their online channels both front- and back-end to create a more engaging and seamless experience for customers. We are already seeing some retailers begin to think about what is next for retail and establish partnerships with voice-controlled devices so as to roll out new services such as voice ordering. It will be these forward-thinking retailers who are ready to provide customers with the services that they desire, and will see success this year as online channels become an even more prominent player in the retail landscape.”

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