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Two weeks in retail - 18th December 2012

So as 2012 draws to a close retailers are hoping Santa will deliver some last minute cheer.

And it looks possible.

Reports of business over the weekend suggest that many retailers saw packed stores and good sales. As ever the barometer of good retail John Lewis revealed a second record week for sales, up 11% to £147.8 million year on year in the week to Saturday, December 15. Deloitte expects a 1% rise in overall retail sales over Christmas.

Discounting too is fiercer than ever as retailers try to persuade shoppers to buy, with 69% of retailers discounting according to a survey by PwC. The figure compares to 66% for the same week last year.

There have also been big rises in online and mobile sales as customers look to avoid the crowds and ensure purchases this Christmas, with sales through the devices set to be the highest they have ever been. A survey released by Tata Consultancy Services earlier this month predicts that sales transactions completed on mobile devices will grow by a whopping 43% by 2015 in Europe, meaning that it is a channel retailers must focus on.

Retailers are reporting late trading and a further late rush is likely with another full weekend and a Monday Christmas Eve still to come. However in real terms, Christmas is all but done for retailers and they are instead having to look to their strategy for 2013 rather than focus too much on how things are going to unfold over the next few days.

So what exactly are their likely focuses going to be?

To be honest the likelihood is more of the same. Customers aren’t suddenly going to become more affluent overnight so it will, sadly, be the continued hard slog of the past couple of years, to convince customers to buy - which means that customer service and experience both instore and online is likely to remain key to the shopping purchase process.

Early in the New Year always sees some retail casualties and in 2012 we have already seen some high profile names fall into administration – the most recent of which being electricals giant Comet. While there will inevitably be further casualties we can perhaps only hope that the worst may be over. Since the banking collapse of 2008 retailers have been forced to trim the excess from their businesses to sustain them operationally, whilst pressure on costs has meant they have also had to work hard to keep prices low for a nervous customer meaning a squeeze on their own margins.

Meanwhile store expansion and development has slowed as retailers focus on their businesses and on ensuring stores in the best locations as the showrooming trend - where customers use the stores as part of an internet shopping experience - continues. As the multichannel trend evolves further its impact on stores will continue with retailers such as Argos having already stated an intention to slim store portfolios to concentrate more fully on their online business.

Retailers will continue to be maximising investments in their existing business and protecting every bit of potential sales and profit – whether that could be potentially lost through theft or fraud or simply through poor management, customer service or lack of availability.

As ever, persuading the customer to buy in 2013 will be key next year.

Essentially that simply comes through to doing the basics of retailing well. Those that manage it will be those we will see perform strongly over the coming months. Those that do not are likely to join the other retail casualties that have suffered at the mercy of 2012.

2013 won’t be easy but the hope is that it will bring a less harsh reality than recent years.

In the meantime, Loomis UK wishes you all Seasons Greetings and a prosperous 2013.

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