Deal-driven shoppers turned online, abandoning the high street this Christmas, new figures from Barclaycard suggest. This festive season was, says one commentator, a “pivotal moment” for online.
Analysis of Barclaycard spending data over the Christmas period suggests that consumer spending grew by 4% overall. But while online spending rose by 17.9% between November 22 and December 26 2015 (compared to November 23 to December 27 2014), in-store sales grew by just 0.2% over the same time.
Ecommerce sales growth peaked on Black Friday, growing by 15.1% to account for 24.6% of total spending that day. Barclaycard said the average transaction value of online purchases was 6.6% up on the same day last year, but that high street sales were down by 6.7%, with a 7.8% fall in transaction value. as well, suggesting shoppers are becoming more confident about making major purchases online. Overall spending on Black Friday was down by 1% compared to 2014.
The figures come in the week that Elite IRUK Top500 retailers John Lewis and M&S reported strong growth in their online and mobile sales. John Lewis said online transactions grew by 21.4% to account for 40% of its Christmas trading, while mobile was the fastest growing channel, with sales from smartphones and tablets up by 31%. M&S reported flat sales (+0%) overall, with a 5% fall in general merchandise sales – but a 20.9% rise in business through its website.
“It is evident that the 2015 peak period was a pivotal moment for online sales,” said Iain Devine, commercial director at digital consultancy Salmon , commenting on John Lewis’ online and mobile sales growth. “Mobile and online shopping are no longer just part of the ‘multichannel’ mix but the focus of it. For retailers who saw online success over the period, this is a reflection of ensuring they were prepared with strong online operations for the influx and were ready to make the most of the opportunity.
“The most successful retailers are those that planned their online peak operations strategy, briefing relevant departments to ensure all online trading and operations teams could anticipate surges and were ready to react.”
Roy Horgan, founder of dynamic pricing platform Market Hub, says that retailers’ move towards early and “excessive” discounting over the Christmas period risked undermining the retail sector. “
He said: “This race to the bottom on price is bad for producers, consumers and retailers. Only 25% of the $4 trillion in retail pricing is supported by any kind of predictive analysis, and more than half of discounting is ineffective. Our own work has shown that, in many stores, more than 20% gross margin is being lost annually.” He said predictive pricing could be used effectively across sales channels to avoid these pitfalls. “If every product has its perfect price, January sales can become a thing of the past; retailers can retain their brand value, margins can be recouped, customers stay happy, and the high street can start becoming competitive again.”
The trend seen at M&S towards falling fashion sales found an echo in Barclaycard’s analysis of debit and credit card transactions that passed through its systems – which it puts at nearly half of all UK transactions. Overall, clothing sales grew by 1.2%, thanks to the much reported warm weather seen in November and December. But family clothing sales, it said, were down by 1.3% while shoe sales were 1.5% down, though women’s clothing grew by 3.3%, and men’s by 24.3%. The picture varied by sales channel: in-store clothing sales were down by 3.6%, according to the Barclaycard figures, online clothing sales were up by 14.6%.
Department stores saw in-store spending grow by 4.5%, a rate eclipsed, however, by the 18% growth in online spending. At supermarkets, the Barclaycard figures suggest, in-store spending was down by 0.7% in December, but online sales were up by 13.5%.
Chris Wood, chief operating officer at Barclaycard, said: “In many ways, this Christmas brought to the fore all the shopping trends of 2015. The large spikes in spending, centred around sales days like Black Friday, emphasise consumers’ increasing search for value as they hold back their spending until the best deals emerge. Likewise, whilst online shopping has grown in popularity throughout the year, the strength of consumer preference for digital over the high street was seen in full effect over the Christmas period. As retailers continue to release their Christmas trading updates we expect many to reflect these changing behaviours.”
He said that a large proportion of consumer spending was on activities and experiences, rather than retail goods. “Looking ahead to 2016, it will be interesting to see where UK consumers choose to spend their money, and how the continuing shift towards the purchasing of experiences and services, as opposed to goods, develops and what that will mean for the retail sector,” he said.
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