The Christmas Sale Strategy
The Make or break scenario
WES NEWSDESK – London 30th December 2011
Shoppers have taken to the United Kingdom high streets with gusto, trawling for the ultimate bargain. The sales usually start on Boxing Day, 26th December, however, it appears that many stores have heavily discounted their goods throughout November and December. This in a last ditch effort to balance the books after what has been a challenging year for retailers. It’s a make or break scenario with retailers succeeding or failing in this Christmas sale strategy that started well before Boxing Day. The World Entrepreneur Society (WES) takes a look at whether the Christmas season of 2011 provides a prosperous growth for the retail business.
THE SHOPPING ATMOSPHERE
The UK weather failed to entice many bargain hunters, as U.K. shopper numbers fell on the 27th and 28th December, by 0.7 percent from the 21.5 per cent seen on Boxing Day, that’s according to market researcher Experian Footfall. The number of shoppers increased this year, although this was not due to bargains, but to extended hours which helped boost business, which was limited last year by Sunday trading restrictions. There were massive bargains with department store chains enticing shoppers with massive price cuts as much as 70 per cent. However, business has slowed down since Boxing Day, with reports stating that the main Christmas sale areas of Oxford Street, Bond Street and Regent Street would take in about 100 million pounds this week.
THE COMPLACENT SHOPPER
Despite the early sales strategy, shoppers waited for the eleventh hour to see if there would be further reductions. Experts argue that, "The danger is that shoppers could become desensitised by the idea of lowered prices and may not see the attraction as vividly as previous years. Those stores that did hold their nerve and their prices in the run up to Christmas have their last throw of the dice for this year if they are to recoup earlier losses." Indeed retailers were concerned that by starting the sales too early, there’s a consumer expectation of further price reductions which could ultimately see limited returns. Also competition is fierce as online shopping has taken the high street to your doorstep. This is convenient as it is less frenetic as braving the elements at the crack of dawn to catch the best deals. Online retailers are optimistic that this year they will be able to eat into the market share usually taken up by the high street retail giants. Ellen Flood, independent shopping expert from Shopow, said "This is the first year when the online stores will pose serious competition to the high street in terms of the sales". It is estimated that about 186 million pounds has been spent online on the 25th December.
STAY OR TAKE A HIT
For small business, it was all about thinking of ways to compete with the big retail stores and online shopping. The analysts' working theory is that big one-stop retailers, like the supermarkets and large department stores, win and the specialist stores lose. Indeed, why trawl around the high street in the cold when you can get more Christmas presents under one roof? Reports suggest that some 78 per cent of small businesses expected their turnover to either take a hit or stay the same over the Christmas period. This year has been a struggle for the small entrepreneur. Two in five companies, about 37 per cent, also expect their profit to drop, with 41 per cent expecting it to stay the same, that’s according to a study of 351 small businesses by Opinium Research. Small businesses expected their net marketing spend to increase by an average of 18 per cent. The figures from Opinium Research suggest that small business faced a tough Christmas season with potential casualties. James Meekings, director at online borrowing portal Funding Circle states that retailers have been cautious about Christmas demand, but provides evidence that there are still resilient, strong businesses. 'Despite the nervousness within the retail sector, other buoyant sectors have driven a high volume of demand for expansion capital. In fact, 42 per cent of our loans have been for this purpose, showing clear evidence that it’s not all doom and gloom". Have your say…