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Shopping for Christmas 2014
Christmas 2014: characterised by rapid online growth, the spurt in mobile transactions, Black Friday, click and collect and major distribution problems.
The Centre for Retail Research provided a new independent forecast for 2014, sponsored by RetaIlMeNot and Vouchercodes.co.uk. This covered several countries. This page deals only with the UK and provides actual figures along with our forecasts.
Christmas 2014 was kind to most retailers. Sales increased by an average 2.2% in 2014 compared to the previous year. We define Christmas as the six week period between mid-November and the end of December. Sales rose by almost £1.6 bn from £72.662 bn to £74.261 bn. The improvement in the economy and consumer confidence, bucolic weather, and a prevailing feeling that people wanted to enjoy a 'good Christmas' this year all added to Christmas sales.
The growth in Christmas spending in the UK was higher than any other European country, and was only surpassed by the U.S., which experienced Christmas retail growth of 2.9% (to reach £374.461 bn).
The importance of Christmas
In addition to the religious symbolism of Christmas, its important to retailers is shown by the following chart. Many retailers make more than half of their sales and profits in the three months before Christmas.
Learning from Experience
In 2013, what went wrong for retailers is that after a good November period and strong sales in the first week of December, retail sales flattened off and did not improve until a few days before Christmas. The post-Christmas sales period (what we used to call the New Year's Sales) was unenthusiastic with trade badly affected by high winds and road congestion.
In 2014, retailers decided to stimulate buying in late November/early December was making a big thing of 'Black Friday', the high discount feature imported from America. There were a series of daily flash sales that generated £850 mn on Black Friday (28 November) and £600 mn on the following Monday (also Cyber Monday). These certainly got people spending, but trade then fell back for the next couple of weeks: some shoppers were awaiting more discounts, others had brought forward spending that would otherwise have occurred in the middle of December. Many retailers were unable to fulfil the online orders made over the Black Friday weekend, or click and collect, and the largest courier firm announced it would cease accepting any more deliveries for a time as it was failing to cope effectively with the work already in hand.
Online Christmas Retailing
Online retail accounted for almost one-quarter (23.4%) of Christmas spending in 2014 and online sales rose from £14.93 bn (2013) to £17.37 bn, growth of 19.5%. Much of this was click and collect. Online retailing would probably have been even higher, but the distribution fiasco after Black Friday persuaded many shoppers to go to physical stores to buy their goods to avoid being let down by online retailers.
In spite of these problems online retailing had achieved almost one-quarter of all retail spending this Christmas, thus passing another milestone in its (so far) triumphal march through the conventional retail industry.
Multichannel and Negative Growth for Stores
Although 2014 was a better Christmas, sales through stores fell in 2014 by -2.1% in the UK because all the main retail growth was snaffled up by online traders and store operators selling online. Virtually all that 19.5% online growth was achieved at someone else's expense.
Multichannel retailers like Tesco, JLP, or Argos succeeded because goods could be bought online and in stores and online purchases could be collected from stores. The issue for retailers lies in deciding the product mix they require of online business and retailing through stores. But although many loathe Christmas shopping, most active shoppers love the buzz, the decorations, the crowds and the vast range of products available at Christmas time. Retailers that survive are those that can create that excitement and the thrills of the chase and who make technology work for them in meeting the different needs of discriminating customers. So we are not expecting the whole business of Father Christmas to transfer online any time soon, but it will depend on how well retailers adapt to the new shopping world.
The Mobile Christmas
In 2014 almost 30% of Christmas spending (£5.18 bn) was done using mobile technology, both smartphones and tablets. This was a greater proportion than anywhere else in Europe - last year's mobile percentage of spending was 8.9%.
What did people spend on gifts?
Spending per household
Total spending per household £775.03
- Spending on gifts is the biggest item, representing 59.2% of Christmas spending, a small increase compared to 2013.
- Spending on decorations was down slightly.
- Spending on Food and Drink fell because food prices were lower, caused by international trends as well as greater completion amongst retailers.
This study covered shoppers and retailers in the UK, France, Germany, The Netherlands, Italy Spain, Belgium and the U.S.. Interviews were carried out by 1000 shoppers in the major countries and with 50+ large retailers in each country (collectively representing 20%+ of national retail sales).