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The factors shaping UK peak season 2019 – and how the sector is reacting


Can peak season sales carry on growing indefinitely? Weighing on the usual predictions on ecommerce growth are concerns over the economy and an election campaign that could dominate headlines.
Peak season, loosely defined here as the period between Black Friday and Christmas, has delivered growing sales to the retail sector for several years.

However, economic uncertainty has been weighing heavily on the retail sector this year and it is unclear whether this pattern of growth will continue. September showed the lowest year-on-year growth in ecommerce ever, according to figures from the British Retail Consortium (BRC).

The BRC attributed the poor figures to the danger of the UK leaving the EU without any agreement in place, commonly called a “no deal Brexit”. The economy narrowly avoided a recession (two consecutive of negative economic growth) in the third quarter of the year. Two major retailers, Yves Rocher and Veepee, have this year announced they are quitting the country.

Weighing on sales is continued consumer uncertainty about the political situation. The spectre of the UK leaving the EU without any agreement in place has retreated for the time being. However, it has far from vanished entirely.

Boris Johnson negotiated a new deal with the EU in October which will provide for Northern Ireland to remain in a customs union with the EU while Britain (England, Scotland and Wales) exit it. If the UK exits with Boris Johnson’s deal in January, the official deadline, it will have a year to negotiate new trade arrangements with the EU before Britain leaves the EU with no deal anyway.

The UK is currently in the midst of a general election campaign, with several different approaches to Brexit on offer. Alongside the Conservatives’ offer of Johnson’s deal, the Labour party is offering to negotiate a new deal with the EU and then put this before the public in a second referendum, while the Liberal Democrats offer an unequivocal “remain” position by promising to revoke the UK’s notice to leave the EU.

Based on current polling the Conservatives are widely expected to win a majority, allowing them to implement their plans, but it is far from clear what these actually are.

IMRG expects growth of just 2-3% for the Black Friday period (defined as an eight-day period running from 25 November to 2 December. The research firm said the figure was the lowest forecast it had ever put out for a major online sales event but said that sales could be “flat or even negative”.

Despite the economic headwinds, the sector itself shows signs of optimism.

Last year jobs website saw a 30% increase in job postings in November and December compared to August and September. The site expects this to happen again this year.

Sean McKee, director of ecommerce at Schuh, says that the company is happier with the positioning of Black Friday this year. It is a week later than last year, coinciding with the end of the month and therefore pay-day.

New Yodel CEO Mike Hancox said in a recent interview with eDelivery that the company was not expecting a reduced peak this year. He thinks volumes could be double the average they are on an average day.

Hermes is estimating that year-on-year parcel numbers will be up 14%, with 12.8 million parcels to ship in the first week of December alone.

In such an unpredictable environment, retailers need above all to have robust and scalable logistics in place. The focus needs to be building the flexibility into networks that will allow them to support any level of volume and not sinking investment into capacity that will not be used. Retailers and logistics operators will need to be able to scale up staff and warehouse capacity are also needed.

Part of this will be smart use of data; for example, by using historical order volumes, companies can model surges in demand. Hancox says that Yodel is taking a data-driven approach to this year’s peak.

“What we’ve done with retail clients is worked very closely on forecasting more than ever before probably in a carrier like Yodel.”

Built-in flexibility means that retailers won’t be caught off-guard by either disappointing or higher-than-expected sales figures, either of which remain a distinct possibility.

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