Every year at the start of the ‘Golden Quarter’ in October, all retailers face uncertainties about their critical sales performance leading up to Christmas. Have they committed to enough stock (but not too much) of the key selling products? Will they lose sales or profit because of competitors price reductions? Have they enough sales staff in their stores at the busiest times to meet demand? Is their online business operation sufficiently robust to respond to the growing level of ‘armchair shoppers’ and the last-minute annual surge in online orders? How might the unpredictable winter weather over the peak weekends before 25th December impact town centre footfall and sales?
However, this year many UK retailers face an additional set of extremely unpredictable variables which makes planning and staffing almost impossible. These include the constant and changing COVID-19 restrictions placed on all businesses, including retailers, and which are often imposed at very short notice and vary from region to region across the UK.
For example, from the 23rd October, all retailers in Wales now face similar restrictions to last Spring with all ‘non-essential’ retail closed until at least 9th November (but with absolutely no information about what might happen after that date) It makes any Christmas business planning impossible.
In Scotland, a new 5-level restriction system is due to be introduced from 2 November and with ‘non-essential’ retail being closed in those areas that might be categorised under the highest protection level.
Although in England all retailers are currently permitted to trade, there are lots of signals that, as COVID-19 infection numbers increase, additional and more restrictive rules might not be far away for many regions. If the current Welsh 17-day ‘firebreak’ was to be used as the model for a wider ‘Tier 4’ lockdown in England, then the restrictions on ‘non-essential’ retail would exclude the sale of every Christmas gift category and so would clearly have a huge impact on Christmas sales.
There is lots of evidence that everything about Christmas 2020 is also beginning earlier than ever before. Amazon have started their annual ‘Black Friday’ deals almost a month before the event at the end of November. Selfridges opened its Christmas shop 75 days before Christmas and St. Ives had their Christmas lights switch-on the 28 October, a full month earlier than usual!
A survey carried out by OnePoll for John Lewis and published at the end of October highlighted that 60% of the shoppers polled planned to complete their Christmas shopping by the end of November with 1 out of 3 planning Christmas earlier than usual this year. John Lewis also reported that two weeks ago, sales of Christmas baubles were already up 120% year-on-year. Finally, the British Retail Consortium, whose membership includes most of the major UK retailers, has just launched an advertising campaign urging consumers to shop early.
The evidence around an anticipated increase in online Christmas shopping this year is also compelling. Amazon has created around 10,000 new jobs in 2020 to meet the upsurge in demand and the Royal Mail have also announced they are creating 30,000 additional, temporary Christmas jobs in anticipation of a surge in online shopping volumes between now and the end of the year.
A recent poll from Retail Economics suggested that 71% of consumers were reluctant to do their Christmas shopping in a physical store this year and research published this week by ParcelHero suggests that Christmas 2020 online sales will overtake physical store sales for the first-ever time.
However, Christmas 2020 is unlikely to see record total sales, given the huge economic uncertainty, low consumer confidence and job insecurity as the furlough scheme ends. This does not even start to consider the spectre of a ‘no-deal exit’ from the European Union at the end of December. Although this has been almost overlooked recently, it has the capacity to cause additional significant shock and disruption to many sectors, including retail, if a UK trade deal isn’t agreed in the next few weeks.
It all adds up to a few weeks of great uncertainty for UK retailers, with this ‘Golden Quarter’ likely be tarnished by the direct and indirect impact of some unprecedented challenges.