What rescued Christmas in 2012?
What shining knight in white armour rode to the rescue and saved the retail economy from a potential disaster? Well, as luck would have it, it was internet marketing. Online sales soared by almost a fifth and rescued what would otherwise have been a very gloomy Christmas for the retail industry. Overall the total UK non-food sales rose by a relatively low 1.5%, though in fairness that in itself isn’t that bad considering the depths of the economic recession. However, without the input of online sales then this figure would have been much worse.
So is online marketing the key to the future prosperity of retail sales?
Well, yes, but that needs some qualification as it currently stands. As successful as online sales are, they still only account for a little over a tenth of all non-food retail sales, so there’s a way to go yet before it can stake its claim as the saviour of retail.
According to the Consortium of British Retail (CBR) sales in December were up 1.5% on 2011, while like-for-like sales, which exclude new store openings, rose by a meagre 0.3 percent. However, it was the 17.8% jump in online non-food sales that made all the difference in 2012. According to BRC director general, Helen Dickinson, those businesses which previously criticised their rivals for investing heavily in improving their websites and e-commerce operations, are not now looking quite so smug. Speaking to the BBC she said:
“Since the beginning of 2011 we’re really not going anywhere. Many retailers have invested a lot in making their websites easier to use across devices and also increasing confidence in their online security… the surging popularity of tablets and smartphones giving even better access is a major factor.”
“For the more established retailers, it seems that much of the growth is now coming from online orders, while shop sales are stagnant at best.”
So who were the winners, and who lost out in the Christmas battle? Well, as you would probably expect department stores came out on top, but given they stock most of what you would want to buy at Christmas under the one roof that’s hardly surprising. However, statistics indicate that they had been doing pretty well anyway throughout the course of the year due to seasonal sales and attractive online offers.
Of all the big department stores John Lewis clearly offered the best brand and the best online offers with its click-and-collect service.
Debenhams, on the other hand, remained profitable because of its strategy of running frequent sales which staved off the curse that affected the wider High Street. However, it is expected that Marks and Spenser, which has yet to report its official figures for retail sales in December, is expected to have taken a bit of a thumping. Overall, in spite of the growth of online trading, the flat reading on inflation-adjusted sales was the worst December performance since 2008, so the country is far from over the worst.
What are the prospects for 2013? Well, analysts would seem to suggest that we shouldn’t hold our breath. According to David McCorquodale, head of retail at KPMG, things will not improve in the short term, and other businesses will follow in the footsteps of Comet:
“January will be a tough month for retailers as consumers face up to their credit card bills after Christmas, and it’s likely 2013 will bring more of the same challenges. There will be no boom and it is likely more than a few will go bust.”