The holiday shopping season truly is a make or break period for retailers these days, especially as the increase in competition, tighter store margins and economic instability place a heavy toll on the retail sector. In fact, the so called ‘Golden Quarter’ is so crucial, it can account for up to 40% of annual sales for some retailers.
So, how exactly did UK and US retailers perform during those precious few weeks leading up to Christmas Day 2019? We investigate…
A not-so-happy holiday season for UK retailers
The UK High Streets were painted red this holiday season, and it wasn’t an attempt to get people into the Christmas spirit. With a ‘go big or go home’ mentality, UK retailers offered big discounts in an attempt to draw in the crowds over Black Friday and Christmas.
Despite the increased efforts, the last three months of last year saw sales fall by an annual rate of 0.4% and were dragged down by a 1.4% drop in non-food spending, according to data collected by the British Retail Consortium in collaboration with advisory firm KPMG.
As a result, last year we saw the worst annual performance on record for the retail sector, with the value of retail sales falling 0.1% in 2019 (there was a 1.2% growth in 2018).
Last year, Black Friday overtook Christmas as the biggest shopping week of the year for non-food items for the first time. Despite its increased popularity, British Retail Consortium data showed that over the November-December period sales were down 0.9% when compared to the same period in 2018.
Sectors hit the hardest include specialist shops selling toys and computer games (4% decline) and clothing stores (3.3% decline), according to Barclaycard.
While grocery retailers raked in a record £29.3 billion through their tills in the final quarter of 2019 – a £50 million increase from 2018 – data from Kantar revealed that it was the slowest rate of growth over the Christmas period since 2015.
The only supermarket that managed to buck the trend was Tesco, which experienced a marginal growth of 0.1%.
John Lewis Partners announced like-for-like sales down 2% from the 17 November to 4 January alongside the departure of its Managing Director, Paula Nickolds, while Marks & Spencer saw shares fall after it announced a decline in clothing sales and poor online growth.
Overall, retailers failed to draw consumers away from their cash, which has been attributed to unreliable weather, political and economic uncertainty, and consumers leaving their shopping to the last minute in hopes of bigger discounts.
The British Retail Consortium’s Chief Executive, Helen Dickinson, said: “Twice the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election — further weakening demand for the festive period.”
According to Barclaycard’s Esme Harwood, there was an uptick in shoppers’ confidence in December following the decisive election result, but “optimism hasn’t yet translated into high street sales.”
US retail figures boosted by impressive e-commerce sales
In the US, overall holiday retail sales rose 3.4% – figures that were boosted by booming online sales.
A report by Mastercard found US shoppers spent more online during 2019’s holiday shopping season, with e-commerce sales hitting a record high.
E-commerce sales made up 14.6% of total retail sales in 2019 and rose 18.8% from the year before.
Thanksgiving traditionally kickstarts the US holiday shopping season, yet Thanksgiving fell on 28 November last year, a week later than 2018 (22 November), meaning retailers had six fewer days to drive sales.
But Steve Sadove, senior adviser for Mastercard, said retailers were strategic in their approach:
“Due to a later than usual Thanksgiving holiday, we saw retailers offering omni-channel sales earlier in the season, meeting consumers demand for the best deals across all channels and devices.”
Last year retailers invested heavily in providing same-day delivery, lockers for store pick-up and improving their online presence as they competed with e-commerce giants like Amazon.
Interestingly, this year another record was met during the US holiday season – Apple App Store customers spent a record US$1.42 billion between Christmas Eve and New Year’s Eve.
While the UK’s political and economic uncertainty seems to have dealt the retail sector a serious blow, US retailers pathed the way forward by investing in omni-channel retail offerings that promote sales online and in-store during this critical time of the year.
