Christmas feast?
How is Christmas trading likely to turn out, and what can you do about it?
Retail and hospitality businesses have something in common with fashion designers. No, not the diva-like temper tantrums (at least not all the time). What we share is that we are constantly planning ahead for seasons that our consumers are not currently experiencing. For many of us, then, Christmas range selection happened months ago, the advertising is already made, the window displays designed and promotional strategy written.
At this point, arriving in December, there is sometimes therefore a little moment of calm before the coming storm. And with the economy the way it is now, that moment of calm can quickly become a moment of worry - will the consumer actually show up this Christmas?
That worry is only made worse by some of the stats floating about. The BRC this week reported weak November trading figures, albeit with the big caveat that Black Friday is a week later this year and effectively falls into the December numbers.
Similarly, a glance at the long time series of the GFK consumer confidence figures which is offered by the Commons Library data service shows that although the figure has recovered a bit this year, it remains in fairly gloomy territory by historical standards.
A survey of retail industry headlines isn’t much more comforting, with a slew of ‘profits not quite what we hoped’ and ‘restructuring to save costs’ headlines over the last few weeks from retailers who had historically been reliable performers.
There is also a worry, I suspect, amongst some retailers that the later Black Friday this year might have pulled forward some gifting purchases - so that what looks to most like a reasonable first week of December might actually be illusory.
There are, however, also reasons to be positive. Buried within the GFK numbers, for example, consumers seem to feel more positive about the prospects for their own personal financial situation over the next 12 months than they have for a while. And when you look at individual retailers, there are plenty who are doing well. Just consider M&S (shares up 57% over the last 12 months), Dunelm (9%), Next (28%) and Kingfisher (13%).
So what is really going on - how can we reconcile the gloomy picture with the more optimistic one. Here’s my ‘elevator pitch’ summary on the situation going into Christmas:
Consumer confidence is there, but is fragile - even amongst those retailers seeing positive year over year growth right now, many are achieving that despite their underlying footfall being down
As a result, there is a widening gap in performance between those retailers who are good at turning footfall into revenue and those who are not. The difference between the “+20% share growth” cohort of retailers and the “-20% share decline” cohort is not structural - it is executional
What can you take out of that for your own business? Well, given that many of the big structural decisions you’ll have made about Christmas trading were, as we’ve seen, made some time ago there is little point revisiting them now.
There remain, however, plenty of things to focus on in these last few weeks. If the difference between retail winners and losers is driven by their ability to turn customer visits into profitable sales, many of the things that determine that are still yours to influence.
Are your store staffing rosters right? (This is the last time of year to be cutting corners on hours). Are your colleagues motivated, excited and incentivised to deliver a brilliant peak? Is the excitement and energy of what will be a make-or-break trading period shared right across your business. Have leaders in your company taken the time to share your goals for this period, and the criticality of delivering them, with your frontline teams?
Long time Moving Tribes readers will recall that in January this year my analysis of last year’s trading period concluded that the difference between the winners and losers that year was how they coped with low footfall and how good they were at ‘asking for the extra sale’. I predicted then that in a persistent climate of consumer nervousness it was this ability to ‘control the controllables’ and trade well by driving conversion and basket size which would determine a retailer’s fortunes in 2024.
I think that has proven to be true, and will be the dominant factor this Christmas too.
I wish every retail business well in these last minute preparations for peak trading. Good luck out there.
P.S.
Moving Tribes is kept free for you to read and share thanks to generous support from partners. I’m delighted to be working with the excellent team at Howard Kennedy for this series of posts - they are a full-service legal team with a lot of experience of the kinds of issues consumer businesses often face, so do look them up if you need to.