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Shopping for Christmas 2016
Christmas 2016: Trading was quite robust, but many traditional store retailers lost out to discounters and online sales
The Centre for Retail Research provided a new independent forecast for 2016, sponsored by RetaIlMeNot and Vouchercodes.co.uk. This covered several countries. This page deals only with the UK
Christmas 2016 was better than many had expected and continued the pattern of reasonable trading since the Brexit vote, roughly as we predicted. Retailers seemed to be on permanent discount. The November Black Friday/Cyber Monday weekend became ten days of offers and promotions, and was preceded by offers and followed by other offers. Not surprisingly, this pulled forward sales from December which became rather flat for everyone except electrical goods specialists and the grocery and licensed victuallers. Shoppers this year returned to physical stores on the Black Friday weekend, which were quite busy and was certainly a pleasant difference compared to last year. The period was practically trouble-free. Although the threat level from international terrorism against the UK was classed as severe, people continued shopping.
However, compared to several previous Christmases, there was an unexpected dearth of shoppers in the main cities on many days, whilst the smaller retail centres looked like ghost towns. All that was missing was tumbleweed blowing through the streets. This is part of a trend by shoppers, but is accentuated by periods after retailers have reduced prices, when shoppers see no need to go shopping if they might get things cheaper the following week. Thus there can be games of 'dare' between shops and shoppers, trying to find out who will break first. Ten years ago, reducing prices before Christmas was seen as evidence of a retailer in trouble: these days everyone does it.
Sales by Online Retailers and Traditional Physical Retailers
The switch to e-commerce continued, with online sales rising by 12.9% compared with only a 1.9% increase for total retail sales in Christmas 2016. Total sales (traditional shop retailers plus online retailers) was £77.6 bn over Christmas 2016, of which online sales were £21.0 bn (27% of all retail sales).
We define Christmas as the six week period between mid-November and the end of December.
Many of the major grocers had a better Christmas than predicted, although the German food discounters failed to notch up their usual superb performance. Clothing, had a terrible time (though M&S did well with its fashion).
Christmas Markets. Christmas (or German) markets did well again, but now that there are so many Christmas markets they must be having some effect on retail and hospitality. Information about Christmas markets in the UK and other parts of Europe can be found on our website, but this has not been updated for 2016 although the basic figures are believed to be OK.
The importance of Christmas
In addition to the religious symbolism of Christmas, its importance to retailers is shown by the following chart. Many retailers make more than half of their sales and profits in the three months before Christmas.
Learning from Experience
Black Friday has continued to be a major feature of Britain's Christmas, although UK retailers have learned to spread the event over several days and ensure that they make some profit from the offers. Most analysts shake their heads in despair at retailers turning what used to be their best season into one that generates higher sales than profits. Online retailers continue of course to push promotions, Black Friday and Cyber Monday: this will continue to prevent traditional retailers returning to normal profit margins. We guess that Cyber Monday was obscured in 2016 by all the other offers over a ten-day period, so that any sales boost on that day was less dramatic than predicted
We are normally asked to predict the online and offline sales for various peak days including Black Friday and the best shopping day before Christmas in Britain and eight other countries. Trading patterns at Christmas change from year to year. This year, because there was a whole week of shopping days before Christmas Day (which fell on Sunday) we declared that the Friday would be the busiest shopping day and named it 'Frenzied Friday'. Very grateful for the Observer to pick this up and to publish it the previous Sunday, and this became what prats call a trope during the whole week. Our analysis was partly because lots of people had ten days of holiday in this period, but was also helped by the weather on Monday to Wednesday was glorious. People took time off to visit pubs, city centres, and go cycling wearing lycra (which we did not predict). After all this pleasure, they had to do their shopping at the end of the week. Friday did indeed prove to be 'Frenzied Friday' - the busiest shopping day - and Saturday was pleasingly flat, because everyone was worn out on Friday. The only regret is that although everyone mentioned 'Frenzied Friday', they forgot about the researchers who predicted that this would be so.
Online Christmas Retailing
The big online story was not the fact that online now represented more than one-quarter of total retail sales, but the rapid growth in mobile retailing. Many ecommerce retailers found that up to 80% of shopper visits to their websites were done via mobile phones and tablets, and 42.3% of all online purchases were made using mobiles.
Multichannel and Negative Growth for Stores
With online retail taking more than one-quarter of the market there must obviously be a fall in the amount of merchandise sold by traditional bricks-and-mortar stores. In 2016, the fall in sales in traditional stores was -1.6%. In 2015 it had been -0.1%.
Although many loathe Christmas shopping, most active shoppers love the buzz, the decorations, the crowds and the vast range of products available at Christmas time. Retailers that survive are those that can create that excitement and the thrills of the chase and who make technology work for them in meeting the different needs of discriminating customers. So we are not expecting the whole business of Father Christmas to transfer online any time soon, but it will depend on how well retailers adapt to the new shopping world.
The Mobile Christmas
In 2016 42.3% (£8.87 bn) of Christmas spending was made by mobiles: technology, both smartphones and tablets: tablets provided 47% of mobile retailing and smartphones, 53%. This was a greater proportion than anywhere else in Europe: in 2014 mobile's percentage in the UK was had been only 8.9%.
What did people spend per Household?
Total spending per household £809.97
This study covered shoppers and retailers in the UK, France, Germany, The Netherlands, Italy Spain, Belgium, Canada and the U.S.. Interviews were carried out by 1000 shoppers in the major countries and with 50+ large retailers in each country (collectively representing 20%+ of national retail sales).