Peak shopping in 2018 was underwhelming, with December retail growth the lowest ever since the IMRG/Capgemini index began.
Summit Commercial Director, Alex Leith, recently appeared on the IMRG podcast to discuss a difficult peak period for retailers. Here’s an overview of the discussion; you can jump to the bottom of this page to listen to the podcast in full.
In the interview, Leith commented that the length and depth of promotional activity across the peak period “nullified the impact of Black Friday”. This is backed up by IMRG figures, showing that 23% of items sold in Q3 of 2018 were sold with a discount, compared to 17% of items over the same period in 2017.
Speaking about why Black Friday works, Leith said: “it’s an event, so retailers can prepare for it, customers expect it, and it’s somewhere you know you’re going to get some business.”
However, he continued: “it’s losing its impact in the UK because it’s not tied to a public holiday like it is in America, and I think also the behaviour of people we see is now looking for product with a deal rather than looking for a deal that’s going to excite them and influence them to buy something.
Leith also remarked: “online is set up for it [Black Friday]. In terms of asset creation, on the High Street, to change all the POS for two days or four days might be quite an expensive and labour-intensive thing, but online you can switch it on and off and use the data to get people instantly.”
Speaking on the effects of Brexit on retail, Leith suggested “it’s had an impact on uncertainty, on big ticket items particularly.”
But he suggested other factors may have contributed to the slow peak trading growth in 2018. He continued: “some of our research suggested that the most commonly communicated discount codes throughout the two months of November and December were discount levels up to 50%, and that didn’t change throughout the Black Friday period. So the urgency of Black Friday is certainly not there for us anymore.”
Speaking about advertising trends, Leith mentioned the winners over the period being those retailers who focused on “what matters for people” rather than traditional Christmas messages. As examples, he cited Poundland’s message of low cost advertising to pass on savings to customers, and Iceland’s controversial but widely shared stance against tropical deforestation caused by palm oil plantations.
Continuing on that angle taken by Iceland, Leith suggested ethical retailing and social responsibility “will be a big thing” in 2019.
“We’ll see more retailers moving into an environmentally-friendly operation and a storytelling operation to win the loyalty battle”, he said.
But he also mentioned that margins will continue to be impacted by “returns and logistics costs” for online and multichannel retailers.
Leith continued: “I hope that a lot of retailers will try and change their models, so incentivise customers to click and collect, for example, and maybe drive returns into stores, because returns online are up to 30% while in stores it’s normally 10%.”
Despite the difficult trading period for many retailers, some did manage to excel. Read our roundup of the retail winners during the 2018 peak period.