The way people shop over Black Friday and the extended Christmas period tells us far more than how people are getting on with their present shopping. The changing way that shoppers are buying becomes magnified thanks to the sheer volume of transactions at this time of year. In addition, time-pressured shoppers look for, and adopt, new ways of doing things that they may then continue over the rest of the year. With this in mind, InternetRetailing is devoting a regular twice-weekly slot to peak shopping season 2017, highlighting the stories that struck us as most interesting over the last few days. Today the focus is on November’s footfall figures, and on how shoppers are planning their Christmas spending.
Footfall holds steady
Shopper visitor numbers to stores held steady during November, according to figures from the British Retail Consortium.
Footfall was 0.2% up in the month, compared to the same month last year, according to the BRC-Springboard Footfall and Vacancies Monitor for 2017, above the three month average of -1%, and a 12 month average of -0.4%. In November 2016, footfall had fallen by 1%. Some areas fared better than others: footfall grew in the South East and North Yorkshire ( both +1.6) but fell in Greater London (-0.1%), Northern Ireland (-2.4%), Scotland (-2%) and the South West (-1.5%).
Helen Dickinson OBE, chief executive of the BRC [IRDX VBRC], said: “November saw a slightly improved picture for shopper footfall as retailers enticed customers with early deals in the lead up to Black Friday. And while online continues to take the greatest share of Black Friday sales, stores continue to prove popular for visitors as showrooms and click and collect destinations.
“Though very welcome after four consecutive months of decline, the month’s growth in footfall is unlikely to signal a reversal of the longer term trend. As price increases for food continue to eat into household finances, consumer spending power for discretionary non-food items will inevitably weaken. So a cautious consumer may sap some of the sparkle from this year’s Christmas trading, which means retailers are going to have to compete even harder for customer spend, which is always good news for consumers.”
Diane Wehrle, Springboard [IRDX VSPR] marketing and insights director, said: “The marginal rise in footfall of +0.2% in November compared with a drop of -2% in October should be taken with a pinch of salt and sadly doesn’t necessarily indicate a change in the winter fortunes of retailers.
“November was characterised by significant discounting with flash sales of up to 50% off, which culminated in the Black Friday period at the end of the month. Whilst Black Friday was largely an online event, the rise in footfall of +3.3% from the first half of the month to the second half demonstrated that it drove activity into retail destinations, both in the lead up to it the day itself and over the weekend post Black Friday as shoppers collected online purchases.”
She said many trips were clearly driven by leisure rather than spending, with footfall up by 1.7% after 5pm, but down by 0.3% during trading hours.
“Indeed, with nothing fundamental shifting in terms of inflation or interest rates over the intervening period since October, it lends further weight to the frequently quoted argument that Black Friday simply shifted the Christmas trading calendar forward. In the light of this, we are anticipating that footfall will be further challenged into December.”
The latest figures suggest footfall increased by 1.8% in the week starting December 4. With only two full trading weeks left until Christmas this was not enough to translate into an annual increase, with overall footfall down by -1.5% against 2016. Nonetheless, says Springboard, this result is an improvement upon the annual decline last year of -2.5% and disguises pockets of growth across the country.
Springboard’s Wehrle, said: “Retail parks with their more targeted retail mix and convenience of location, continue to subvert the trend, dropping -1.4% against the previous week but sustaining an annual increase of +0.5%. This is likely to be due to retail parks acting as a hub for Black Friday Sales click and collections.”
Shopper spending looks set to stay cautious
Most shoppers (88%) will be spending ahead of Christmas, but they are keeping a close eye on cash flow, according to new research from retail and shopper marketing agency Savvy. It questioned 1,000 household shopping decision makers and found that 58% plan to shop online more than in previous years. Around a quarter (24%) buy presents throughout the year, 21% bought on Black Friday and 58% will buy in the first couple of weeks of December, and 25% will leave shopping till the week before Christmas, with 10% making last minute purchases. But 32% will spend less on Christmas decorations, 28% less on going out, and 30% buying less Christmas clothing. Some 65% say they are influenced by discounts and offers when buying for Christmas, while 26% expect to shop online on Christmas Day.
“Savvy’s latest research suggests that the slowing retail spending momentum we’ve seen in October and November is likely to continue throughout the Golden Quarter, as cautious shoppers watch their spending this Christmas,” said Alastair Lockhart, insight director at Savvy. “Reduced consumer confidence and uncertainty as we enter 2018 means shoppers say they plan to cut back on their Christmas spending in a number of areas.
“Retailers are already feeling nervous. Black Friday discounts were broad and deep at many retailers – more the feeling of the January Sales than a one-day spectacular. A toxic combination of weak sales momentum and discounting could have worrying implications. Retailers will be hoping for a pre-Christmas sales surge in the final weeks.”
Cross-border shopping expected to rise sharply
Foreign shoppers are expected to deliver a boost to UK retailers in the run-up to Christmas. Research from VoucherCodes suggests that overseas shoppers will spend 57% more, with sales reaching £1.4bn, up from £905m last year. The research, conducted by the Centre for Retail Research, suggests that across the whole of Europe, Christmas cross-border trade will rise from £3.1bn in 2016 to £4.3bn in 2017 – an increase of 36.2% on 2016. The UK is predicted to see the fastest growth in cross-border trade with total sales expected to increase by more than half (56.8%) on last time.
It says that since the UK has a well-established online sector, the language is widely spoken and currency depreciation has resulted in merchandise becoming cheaper than previous years, purchases made on UK sites by citizens across Europe, the US and Canada will make up one-third of total European sales from overseas retailers this Christmas.
Paul Lewis, senior director of marketing at VoucherCodes, said: “We’re seeing a completely different retail landscape in the UK this Christmas. With so many political and economic changes taking place over the last few years (ie Brexit) shoppers are having to be more open minded when it comes to retail. It’s great to see UK retailers benefitting from cross-border trade this festive season, a growth of over 50% is astonishing and welcome news in what has been an uncertain 18 months for retail.
“As we move into 2018, UK retailers will need to be even more aware of how their prices shape-up compared to their competitors overseas to ensure they remain competitive, retain their existing customer base, and attract new shoppers.
“It’s likely in years to come, especially with faster delivery options and fluctuating currencies, cross-border trade will be increasingly common, and shoppers will be able to locate whatever they need at the right price from various countries.”
Black Friday sales update
Key sectors including home electronics, fashion and media saw huge surges in traffic, orders and revenue on Black Friday, according to Apptus. The ecommerce automation specialist compared those metrics, as seen on its platform with the previous Friday, November 17, and found that on Black Friday user sessions for home electronics users rose by 280%, orders by 2,232% and revenue by 3,358%. Fashion retailers saw user sessions rise by 108%, orders by 1,469% and revenue by 3,242%, and media retailers saw user sessions grow by 570%, orders by 1,969%, revenue by 3,809%.
Michael Ericsson, VP of customer success, at Apptus [IRDX VAPP] said: “Naturally, in-store footfall grabs all the attention on Black Friday, but this data suggests the impact online is even greater. It’s hard to imagine any physical store coping with a 15-fold increase in footfall, which is exactly what fashion retailers saw online. “It’s particularly interesting to see profitability up so strongly, given the focus on price cutting on Black Friday. A ten-fold increase suggests highly successful merchandising strategies were in place, though of course, eSales’ AI capabilities will undoubtedly have helped here.”
Mentioned in this piece…
The British Retail Consortium (BRC) is the lead trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores. (more…)