Shopping for Christmas 2018

The ‘Golden’ Quarter

A large part of a retailer’s annual sales and profits occur in the three months before Christmas. Retailers know that having the right goods at the right price in the weeks leading up to Christmas are essential.

Planning for next Christmas starts just after last Christmas is over. This is not only true for gift-related vertical markets, such as toys, fine wines, perfumes & fragrance, luxury goods, beauty products and jewellery. Logistics are important: for example, supermarkets have to start stockpiling alcohol from September to ensure they have sufficient for Christmas. Note that in North America and, to a worrying extent, in the UK media, the term ‘Holiday’ is being used instead of ‘Christmas’s. It means the same. In the UK, when we talk about ‘Holidays’ we normally mean summer and sangria.

The Christmas of Consumers

Christmas needs careful planning, but the old days of uninhibited Christmas shopping up and down the high street are gone. Consumers spend a lot at Christmas, but spend it on fewer people. Compared to 20-30 years ago, when Christmas was mainly a domestic and family affair, they are now more likely to enjoy entertainment and meals outside the home with neighbours, friends and work colleagues as part of a range of Christmas occasions both before Christmas Day and afterwards. Christmas dinner for the family is still the lynchpin of Christmas festivities, but is now only one of several Christmas occasions.

Retailing’s Pricing Crisis

For a few years, retailers started calling the October-December period the Golden Quarter, because it was the season when they made a lot of profit. This is no longer so. Christmas is now a time of regular price cutting, interrupted by a period of serious discounting called ‘Black Friday’. Christmas is no longer as golden: no quarter is given.

In January 2018, the fashion retailer East reported it had achieved excellent sales over Christmas: a week later, it went into administration. It ceased all trading in May.

Price-cutting around Christmas (once a sign of desperation) might achieve growth in sales and profits if retailers were not already engaged in a constant price war for most of the year. There is clear evidence that the Black Friday promotions simply shift a proportion of purchases away from October and December into November.

ONS (Office for National Statistics) statistics show that in spite of all the price-cutting there is no evidence of any increase in retail sales in total for the Golden Quarter. What is worse is the sense of shopper ennui or ‘discount fatigue’© (as the Centre for Retail Research calls it) created by so much price discounting that shoppers have often lost interest by December. This would otherwise have been the peak of the selling season.

Christmas 2018: Outcomes

This is how Christmas 2018 went. The Centre for Retail Research 2018 forecast was sponsored by RetaIlMeNot,, Ma in France and Poulpeo.

Total retail sales at Christmas, as at other periods of the year, are made up of sales through stores and sales over the internet, catalogues and mail order.

Total retail sales = Store sales + Online sales.

Much of the comment in the media about Christmas reflects what is happening on the high street and largely ignores sales made online. The rapid growth of online retailing (around 10% in Christmas 2018 for example) means that the sales of the average traditional physical store inevitably shrinks compared to the previous year, so the news about retailers tends to be largely gloomy.

The impact of Christmas can be seen from the monthly sales chart 2004-2019 for the UK (Figure 1). Sales are at their lowest in January each year, then they rise to a peak in July (usually), drop back somewhat then rise rapidly from October to peak every December. Note that these figures are sales values (ie not adjusted for inflation) and are not adjusted for seasonal changes.  Examination of the chart shows that there has generally been reasonable growth in Christmas sales, although 2018 saw the smallest growth for six years.

In the UK total retail sales over Christmas 2018 rose by + 3.3% in sales value or 1.4% in real terms. As in 2017, food retailers generally did well, but non-food made little progress as heavy discounting on Black Friday and the weeks before Christmas reduced overall profitability.

The best results were seen by online retailers, whose aggregate sales rose by 10.1% compared to last year. The online share of total retail sales was more than 20% for the first time in the UK.

Other winner were discounters, upmarket companies prepared to cut their prices and electricals and IT. The main losers were clothing and footwear, department stores, and furniture and furnishings.  

Christmas Sales

There are several main features of Christmas Shopping as we see it:

1. Christmas Spending Continues to Rise in Spite of the Gloom (but perhaps by not so much)

(these figures relate to total spending in the six weeks from mid-November to the end of December 2017)

2. Online Growth at Christmas Continues, though pace slackening compared to five years ago

3. To everybody's amazement, Black Friday continues to blossom but becomes more and more an online phenomenon

Black Friday Sales 2018
The idea of Black Friday weekend sales continues to expand, although it is becoming particularly an online phenomenon. More voices have been raised saying that Black Friday is collective suicide for the industry. Total Black Friday period sales (ie Friday to the following Monday) amounted to £8.29bn in the UK and £5.99bn in France last year.

4. Traditional Physical Retailers (shops) Lose Out to Online Retailers
We estimated that sales in physical stores in the UK fell by 2.5% this year in the UK, continuing a pattern seen since the recession of 2008.

  • In the UK, the proportion of retail sales being made through traditional shops (ie not online sales) has fallen from 75.6% in 2015 to 68.5% in 2018.
  • In Germany, it has fallen from 81.1% to 74.3% in the same period.
  • French traditional retailers have seen their share of Christmas sales decline from 85.3% (2015) to 80.5%.
  • In the U.S., the share of traditional physical stores fell from 79.1% to 72.8% in 2018.

5. Christmas is becoming Increasingly Mobile as shoppers switch to ordering goods online or reserving goods in store using mobile devices.
In the UK mobile ordering at Christmas (using smartphones or tablets) rose to 54.2% of all online retail spending.

In the U.S. the proportion was 53.2%, 56.5% in Germany and 49.5% in France.

Mobile use, when out shopping in the UK, mainly comprised price checking (34.7%), seeking additional product information (39.3%), buying it from another store (21.6%) and even buying it online (16.3%).

Similar patterns were seen elsewhere. In Germany the main uses were product information (46.3%), price checks (35.1%), deciding to buy from another company (23.8%) and buying the item online (17.4%). France was similar, although only 13.0% would buy the item online and 17.3% would buy from another company. Contactless payment was on the increase, but fewer than 7% used their mobiles for this purpose.

This study covered shoppers and retailers in the UK, France, Germany, The Netherlands, Italy Spain, Belgium, Canada 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).

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