How was it for you?
Published: 07 February, 2009
Christmas 2008 proved to be a roller-coaster ride for retailers. So which locations were the winners, and what strategies proved most successful in attracting shoppers, asks Graham Parker
The National High Street Index, constructed by Springboard on behalf of the Association of Town Centre Management, concluded that Christmas 2008 was generally disappointing for retailers, with the exception of the grocery sector. Footfall in our high streets nationally was down 8 per cent on December 2007. And the traditional surge in traffic between November and December was somewhat muted at 11.2 per cent, the lowest monthly increase since the Index began back in 2005.
The Index’s figures also confirm that shoppers delayed their trips into town centres until as late as possible, as they held out for the massive discounts they had been led to expect but which often failed to materialise. Many shoppers even delayed purchasing presents until the week of Christmas itself: the highest levels of footfall in our high streets were in the third week of the month, whereas in December 2007 it was the second week that was busiest. And on the last Saturday before Christmas, footfall on our high streets was 7 per cent higher than on the same Saturday last year.
Although consumers appear to have held back during December, they came out in force after Christmas as the sales frenzy peaked with footfall on our high streets on Boxing Day 0.7 per cent higher than on Boxing Day 2007. And the traditional decline in footfall typically in the week post Christmas was less marked this year.
Springboard director Diane Wehrle says: “While it is heartening to see that retailers’ tactic of bringing forward the sales period paid off with the post-Christmas rush and an increase of shoppers on the high street, retailers may have used up their ‘bag of tricks’ too early and could be left with nothing more to offer consumers to coax them back into the shops. Consumer goods prices were slashed so low during the sales that canny shoppers have bought what they need and will now sit tight until the next sales period, which again will put pressure on retailers to bring them forward.”
And Simon Quin, CEO, Association of Town Centre Management, warns: “The High Street Index suggests that tough times are ahead for our high streets. The loss of a number of high street retailers that has already taken place, and the further losses that are forecast, means that town centres will have to work hard to retain their diversity and encourage shoppers to continue to visit them in the face of spending opportunities offered online and out of town.”
The Retail Traffic Index from Synovate Retail Performance takes in a wider range of retail destinations, and it paints a rather different picture of Christmas 2008. Overall, the number of non-food shopping trips made in the month was down by just 1.3 per cent on last year. And Synovate detected a much bigger surge in traffic between November and December 2008 at 33.3 per cent.
Synovate’s retail psychologist Dr Tim Denison says: “We all felt that December 2008 was going to be different to recent Christmases, but according to our latest data the month was in fact extraordinary. In light of declining footfall levels in recent weeks and months, indicative of consumer wariness to go out spending, we had forecast that retail footfall would be 7.3 per cent lower than December 2007. For the first three weeks of the five-week month our prediction was right on track. Numbers over that period were down dramatically, by almost 8.0 per cent, on the same period in 2007.
“Shoppers, it seems, were certain that retailers would slash prices or begin full-blown Sales in the run-up to Christmas if they stayed away. In reality, many retailers held their nerve through this time, or held well-publicised sales which nevertheless only featured clearance stock and not ‘must have’ items. In fact, some of the latter even increased in price such was their desirability.”
Denison recalls that the heavy promotional activity by retailers meant that eventually it was shoppers who broke the stand-off and began their last minute surge on the Friday before Christmas, the 19th. “After that the floodgates opened and the final few days before Christmas saw quite unbelievable crowds, given the economic conditions and state of consumer confidence,” he says. “Monday 22 December proved to be the busiest shopping day of the pre-Christmas period, even busier – by 1.6 per cent – than the 20th, the last Saturday before Christmas Day.
And this late momentum has been carried forward into the Sales period, according to Denison. “From the 19th onwards, shoppers did not look back for the remainder of the month, spurred on by the subsequent and early launch of the winter Sales proper. With some retailers beginning their online Sales on Christmas Eve or Day, and more stores opening on Boxing Day than ever before, there was scarcely time to do the turkey justice before people were thronging the shops again, scouring for those heavily discounted bargains. Saturday the 27th broke many retailer records and transpired, as it did in 2007, to be the busiest shopping day of the year, 3.5 per cent busier than the 22nd.”
So what conclusions can be drawn? Denison explains: “Over the last decade we have witnessed Christmas shopping happening progressively later, but in truth people couldn’t have left it much later than they did this time. The final full trading week before Christmas has established itself as the most critical week of the year since the start of the millennium, seeing footfall peak at levels 14 per cent higher on average than any other week of the year.
“We might be seeing the nascence of a new December trend, in which trading peaks not in the run-up to Christmas at all, but in the Sales aftermath. Buying Christmas gifts for others may now have been usurped by tracking down bargains for ourselves, becoming the new December focus for consumers in our increasingly multi-cultural, different-faith society. Alternatively the pattern we saw last month could simply be symptomatic of the economic downturn facing consumers and their unwillingness to buy gifts at full price. Whichever the case, Christmas 2008 has been a remarkably different trading time when compared to previous years.”
But have all those visitors been spending money, or just window-shopping? The evidence from the British Retail Consortium and KPMG’s retail Sales Moniotor is that it was the latter, and it dubbed December 2008 the “worst December in the survey’s history.”
KPMG calculates UK retail sales values fell 3.3 per cent year-on-year on a like-for-like basis, and 1.4 per cent on a total basis. By both measures, this was the worst December since the survey began 14 years ago.
And actual takings through the tills reflected the weak pedestrian flows detected by the people counters: “The first half of December was very tough for many. Christmas buying came later than usual and shoppers tended to wait for discounts and early clearance Sales,” notes the BRC.
Food and footwear were the only sectors to show sales up on a year ago – the latter reflecting further heavy discounting. Clothing, furniture and big-ticket homewares fell further below year-earlier levels.
The BRC director general Stephen Robertson pulls no punches when summing up the month: “These are truly dreadful numbers,” he says. Some retailers were more successful than others and the second half of December was better than the first, but overall the food sector was almost the only one to show growth. And even this was at the slowest rate since last March. Footwear was the only other sector where sales were up on a year ago. Otherwise, non-food retailers had a torrid December despite a blizzard of promotions and deals, which would have hit margins. Many hard-pressed customers couldn’t be seduced into spending.
And Helen Dickinson, head of retail at KPMG, warns: “December’s performance has historically set the scene for the year ahead, so the outlook is indeed bleak. In a business environment where cash is even more important than ever, due to the impact of the ‘credit crunch’, retailers did all they could in December to keep the money coming in, raising discounts across the month to unprecedented levels.
“That this was the worst December sales performance since the survey began 14 years ago is testament to the severity of the shift in mentality of the consumer.
“Although the food sector continues to hold up, most non-food retailers are having to manage the ‘double whammy’ of falling sales and falling margins and this doesn’t look like changing any time soon.”
