Author: Fara Darvill, Marketing & PR
What’s up in 2017 for retail?
2016 was marked by a series of significant events — political, social and economic — and while we are all probably glad to see the back of it, there’s still an uncertainty hanging over us in these first few weeks of 2017. One sector where changes and behaviours on all of the above were reflected was retail. So we are all wondering what 2017 will hold for the retail sector and for us the customers. The PM Theresa May confirmed this week that Brexit will start in March and the UK will not be able to remain part of the Single Market–therefore we can anticipate some of the outcomes.
This week retailers released their 2016 Christmas trading results, which are largely encouraging. Sainsbury’s (which acquired Argos in 2016) is reporting a good trading spell (combined Sainsbury’s and Argos like-for-like sales up 1% (excl. fuel)). This has, in part, been bolstered by its in-store collaboration with Argos. Retail intelligence body, Springboard, suggests that despite the positive results consumers were cautious in 2016 and this caution sets the tone for 2017. Notably in the same vein, BRC Chief Executive, Helen Dickinson OBE, said ‘the outlook for [retailers] 2017 is tough’.
Black Friday (in-store retail event) and Cyber Monday (online) are both acknowledged to have brought the Christmas consumer spend forward and provided a much-needed boost. This year there was a 39.2% rise in footfall on Black Friday from the previous Friday in November (Springboard). But this uplift did not last, and within a week there was a sharp decline (-14.0%) in footfall. Shoppers stopped when the bargains did. To encourage continued seasonal spend, InternetRetailing.com reports that many retailers brought their January sales (online) forward into Christmas week. This tactic worked for many retailers. John Lewis’s busiest period of the week to Christmas Eve came in the final hours of that week, when its online clearance began. Director of shop trade Maggie Porteous said: ‘Click & collect orders were busy right up to the last collection day on Christmas Eve, and orders for that week were up 15.9% year on year’. This behaviour shows how people are shopping now: they mix online and in-store channels to their advantage to snag the best bargains.
Not everyone was a winner; high street staple Next suffered during the festive peak with in-store sales down and while its online sales were up, they were not enough to make up for the decline in in-store sales. It’s hard not to wonder if this year it too will go the way of other high street stalwarts like Woolies and BHS? InternetRetailing.com suggests that online sales in retail in the week after Christmas were 15% up on the same time last year, but this may well be down to the cold weather snap in December encouraging people to shop at home rather than venture out.
It’s all about experiences
Last year we wrote about ‘experiences’ in our retail blogs and the importance of the retail sector acknowledging this shift. Springboard reports that, ‘The reasons for these shifts in footfall performance share the same foundation, which is a rapid evolution in shoppers’ requirements from bricks and mortar retail destinations, moving away from purely transactional based trips to trips that focus on offering a more rounded leisure experience’. The John Lewis 2016 retail report concurred with this sentiment and revealed that the 2016 customer designed their shopping experience around their own personal mission. Therefore the mission may be researching, browsing or shopping but it will also include going to a restaurant, for example. The retailer believes that their customers have replaced loyalty to a particular way of shopping with switching between channels, shops, mobile and desktop. Mobile was the order of the day for John Lewis: its orders increased by 60% via mobile and accounts for 30% of its overall online traffic. With the ‘buy anywhere’ flexibility offered by the channel and better security in place for mobile transactions (M-commerce) this purchasing trend is set to continue in 2017.
In fact we should expect technology to be big part of this year. John Lewis’s report also showed how smart technology is continuing to touch every aspect of people’s lives, from personal wear to in-home devices. We can now track every aspect of our day, needs and lives and so tech brands like Nest and Samsung are becoming increasingly important and getting into people’s lives in a very personal and long-term way. Being an integral part of customers’ lives is the Holy Grail for brands and retailers. It will be interesting to watch what happens in this competitive space over the next 12 months.
Amidst the doom and gloom of 2016, John Lewis reports that the search term for ‘flamingos’ increased by 200% last year and 70 golden pineapples sold per day at the height of their popularity last year. There is something comforting in those insights… no matter what happens in the world and whatever may come in 2017, UK customers still reserve the right to have fun!