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Two weeks in the UK : Consumers seeking instant savings

With Halloween in a week’s time and the Christmas selling season now in full swing retailers are beginning the hard slog to Christmas.

How customers will behave has yet to be determined.

As with recent years many retailers have started deals early in an effort to get budget-planning customers to better plan their Christmas shopping.

However last week saw Asos boss Nick Robertson blame promotions for a slowdown in his business as he revealed domestic sales up only 1% for the three months to September 30, compared to 15% in the first quarter. Matalan also reported poor results.

Two weeks in retail

Whether customers do actually spend will still be determined by their confidence in their market. And that is likely to have been rocked by last week’s news from the ONS that the annual rate of inflation (CPI) hit its highest point ever last month – matching that seen in September 2008 as it rose from 4.5% in August to 5.2% last month.

Gas and electricity prices were largely to blame but with predicted cold snaps looming that brings little relief to worried customers.

Annual inflation, as recorded by the retail prices index (RPI), meanwhile hit its highest point in 20 years – up from 5.2% in August to 5.6% last month.

There was some good news a few days later when the ONS revealed its latest sales figures. They showed that sales volumes in September were up 0.6% compared to the previous September’s while the value of retail sales rose by 5.4 per cent on September 2010. However textile, clothing and footwear sales volumes feel by 2.1 per cent, the largest drop since April 2008 as the hot weather continued its affect.

But the monthly Consumer Confidence Index fell three points in September, down for the fourth month in a row according to the Nationwide Building Society. It figures showed that 71% of consumers believe the current economic situation is bad – up by three percentage points.

Retailers face a tough task persuading retailers to spend with so many worrying trends around meaning that offers and promotions are likely to continue to be a key part of their Christmas strategy. Indeed Tesco last week revealed that the Big Price Drop strategy it introduced last month stimulated an extra 1 million transactions per week – showing that instant savings are what customers are after.

However some of it will revolve around convenience too with multichannel initiatives such as click and collect continuing to be important. House of Fraser opened its first standalone click and collect store earlier this month in Aberdeen and other retailers have also ramped up their delivery offers to better satisfy those customers who don’t want to battle the Christmas crowds in person.

For those that get it right however shoppers will spend it seems. John Lewis last week revealed sales were up 9.9% to £62.6 million for the week – partly attributable to sales performing well in its Christmas shop and gifting ranges. At Waitrose sales of mince pies were up 80%. The retailer has said its Christmas strategy will focus on making the shopping experience as good as it can for every shopper who comes into its stores.

It’s a strategy many others could follow.

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