Member Article

Retailers urged to protect bottom line during last minute Christmas sales

With the impact of the discounting day itself yet to be fully revealed, retailers are being urged to think about their bottom lines as they gear up to entice shoppers with discounts in the last minute Christmas rush.

The key findings from the Office for National Statistics showed: • In the three months to November 2019, the quantity bought in retail sales decreased by 0.4% when compared with the previous three months; this is the first decline since April 2018. • The quantity bought in November 2019 fell by 0.6% when compared with the previous month, with only household goods stores reporting growth. • Year-on-year growth in the quantity bought increased by 1.0% in November 2019; this is the lowest growth since April 2018, owing to a decline of 1.1% in non-food stores. • In 2019, the official Black Friday was on 29 November and outside ONS’s November reporting period, which covers four weeks from 27 October to 23 November; their seasonally adjusted estimates account for this shift in timing. • Online sales as a proportion of all retailing was 18.7% in November 2019, compared with the 19.1% reported in October 2019.

Phil Mullis, Partner and Head of Retail and Wholesale at one of the UK’s leading business advisory firms, Wilkins Kennedy part of CogitalGroup, said: “The Christmas season is still all to play for and retailers needs to strike the right balance on their price points so that it’s enough to entice shoppers through the door, but not to the detriment to the bottom lines.

“Some analysts have pointed out that one in five shoppers used Black Friday to buy Christmas gifts – instead opting to purchase discounted items for themselves – but we need to analyse November and December together to understand how accurate this is.

“The three month-on-three-month sales decline is undoubtedly caused by the uncertainty surrounding the election and Brexit, and now the country’s path is a lot clearer, we should start to see the economy picking up slowly over a longer period of time.

“There is still an element of uncertainty hanging over us with regards to the UK being able to negotiate a trade deal with the EU, and I don’t think we will see a significant improvement filtering through to the high street until this has been clarified.

“If actual Black Friday itself was included within the ONS’s November data then I think we would have been celebrating a stronger build-up to Christmas. It’s been proven from the latest Black Friday sales – which saw transactions up 7.2% year-on-year according to Barclay Card – that heavy discounting entices shoppers in. Retailers just need to remember that cash is king and to forecast their numbers before deciding what discounting route to go down.”

Wilkins Kennedy is part of the CogitalGroup, an international business services group focused on entrepreneurial and private companies.

This was posted in Bdaily's Members' News section by Matt Joyce .