Shopping Days To Christmas: 100

Welcome to issue 4 of Retail By Numbers

I'll kick off by saying thank you for the many kind messages that I've received about this new newsletter. It was hard choosing the right angle, especially alongside my podcast and Retail Transformation Briefing - but I appreciate your support.

If you're new to the newsletter, then every 2 weeks, I'm exploring key themes which are impacting or shaping the retail industry. Each issue spotlights a particular number. It could be a result, a metric or data point or any other number which I think can provoke interesting thinking.

This week, the number is slightly different...

What’s The Number

100

Shopping Days To Christmas.

Christmas isn't just a festive season; for retailers, it represents a mammoth opportunity, often orchestrated a year in advance with many really starting to ramp up those plans over the summer.

The 100 shopping days to Christmas technically doesn’t mean anything. But in the retail industry and in media, it marks the start of the official countdown to the busiest and most profitable time of year for many companies. An extended Advent calendar if you will. The back-to-school rush has subsided, and while Halloween is increasing in relevance and opportunity (although only for certain categories), it serves more as a precursor to the grand festivities of Christmas.

By now, orders have been placed. Shipments are being finalised, and most are on route or may even be already at their end destination (before the final leg to reach the customer anyway!). The world of retail operations now focuses on onboarding additional team members and delivering the operation consistently, especially from a stock and service point of view.

Meanwhile, from a marketing angle, the much-anticipated Christmas ads season will be starting in what will seem like no time at all. All eyes will inevitably be on John Lewis, waiting to see how they set the bar for this year. The department store is planning to launch their Christmas range in store on the 27th of September. But online, the Christmas tab is already alive and vibrant, bearing the nostalgic and optimistic message of “Let Your Traditions Grow.” A sneak peek of the theme perhaps, or a cunning decoy?

Either way, there’s lots to do and only 100 days to do it all!

Diving Deeper

At this stage, we could take this newsletter in many different directions. Let's focus in on what's special about 2023's Christmas.

Inflation Impacts

As the inflation situation continues, we see a stark trend continuing. Sales values (in £) are growing, but volumes (in units) are dropping, showing the increased prices. The below chart from the ONS provides a clear picture of this divergence between sales value and sales volume.

Usually, increased sales and lower volume would be a profitability win – but that’s ignoring the cost challenges which are hitting businesses hard. These rising costs across all aspects of the cost base require meticulous margin management.

Forecasts hint at the possibility of consumers being showered with impressive discounts this festive season (more on that shortly). So, whilst the instinct may be to slash prices to push volume, we must ensure that we exercise caution to ensure that profits aren't eroded in the process.

The cost of living crisis has severely impacted consumer confidence which is recovering from recent record lows. For a deeper dive into consumer confidence, please read the last issue of 'Retail By Numbers'.

Promotional Activities

Christmas might be the climax, but the crescendo begins much earlier. Peak trading has become a long build-up, made up from some specific trading events. Amazon have announced their Prime Big Deal Days and this will likely inspire some alternative sales events in other retailers. And of course, we can’t forget Black Friday, and Cyber Monday! And with Christmas parties firmly back on the menu, this will present opportunities and spikes for categories like fashion and cosmetics.

Given the strain on consumer finances over the course of the year, we can expect spending to be tough. Therefore, heavy discounts and promotional activity can be expected this year. In turn, consumers may be likely to hold off on full-price purchases until later on, whilst grabbing discounted products early, regularly looking out for the best deals.

Salesforce's Christmas projections suggest a surge in promotional events by early October, with discounting rates of 19%. It anticipates that global discounting rates will peak at 29% around Black Friday and Cyber Monday week. Interestingly, a quarter of all holiday digital sales are expected to occur during this seven-day period.

Operating Model and System Changes

With 100 trading days to go, there's a pressing urgency in the air in terms of operational and system-based changes and transformations. Christmas lockdown or change freeze can help avoid the issues from unintended consequences.

For some retailers, this will mean deploying those last few growth opportunities, whilst for others, it will mean a chance to apply those last critical fixes to stop the operating model from falling over at a crucial moment.

This cut-off date will change for each retailer and the risk appetite, but let’s say there is around 30 days to go – but this could easily be less! So for those working on transformative initiatives, the festive rush is now - go go go!

However, over the remainder of the festive season, it’s a good moment to get heads down and conceive, test, and prepare new features, ready to test and deploy in early 2024. 

2023 themes to look out for

There are a number of key themes to watch out for over the next 100 days:

• Rise of resale: The focus on resale / preloved / recommerce and other circular economy initiatives is more pronounced than ever. More retailers have been doubling down on resale marketplaces and opportunities this year. It presents obvious environmental benefits and a solution for consumers pinched by the cost of living crisis.
• More click and collect: With more people returning to work in offices, we can expect click and collect / BOPIS delivery options to be more popular than ever before. Ensure these are resourced and a pre-peak focus on this would be time well spent.
• Crime prevention: Over the past 12-18 months, we’ve witnessed an increase in shoplifting, aggressive behaviour and other criminal activities. In particular, organised crime has targeted retailers on many fronts – from planned diversions to anarchistic uprisings plotted in plain sight on social media. However, opportunistic shoplifters will be tempted more than ever, especially if they are financially distressed. Stores should be vigilant against this trend, especially as more expensive Christmas merchandise begins to populate shelves.
• TikTok commerce: More particular than just 'social commerce', TikTok has continued its upward trajectory through the year. TikTok Shop is a new channel and could be encouraging more Gen Zers and other social scrollers to place orders within the app.
• Chinese discounters: Shein and Temu will undoubtedly be continuing their intensive marketing campaigns to acquire new customers. With more customers looking to carefully manage their finances, more customers could be trading down to get their hands on the super-low prices. But with up to 25-day shipping times, customers will look to shop early on these platforms and then switch to more local options as the big day approaches.
• Buy Now Pay Later: The BNPL model is witnessing increasing adoption and is expected to show a 9% increase this year as customers look to spread out the cost of Christmas into the new year.

What other trends do you think we should look out for this year? Please share in the comments!

Making the Most of the Opportunity

While many strategies for Christmas have been cemented, there’s still room for tactical trading. Introducing propositions like extended return periods or free returns can significantly sway consumer decisions. Pricing remains paramount – both in terms of remaining competitive in the market as well as from a profitability perspective. Balancing margin, demand and stockholding remains a critical capability for retailers, and this is just as true as Christmas approaches. For those consumers on a tighter budget, creating “gifts under £/$/€” collections and promotions can be a helpful resource to inspire and influence the sale. And bundling relevant products and accessories is always a great approach to encourage customers to trade up or increase spending.

Christmas and peak trading is also an excellent time for head office teams to rally behind their frontline counterparts and take an active role in the operation. When I was at Tesco, we always took part in the “Helping Hands” scheme for the toughest parts. As with all time on the frontline, it’s incredibly rewarding and helpful for all involved.

And finally, if you’ve not already done so, pay attention to how you will support and reward colleagues during and after the peak season. We can expect companies to start announcing planned days when the business will be closed and not active. Tuesday 26th and Wednesday 27th December are good opportunities to give time back and allow people to partake in festivities with families and friends.  

Christmas Ads

With 100 days to go, I couldn’t help but look toward the Christmas ad campaigns. Whilst live TV viewing numbers decline, the TV ad serves as the centrepiece of the seasonal branding and is an important theme to set the scene across the entire proposition and marketing campaigns.

The emotional journeys, favourite returning characters, festive nostalgia, the occasional clanger and the associated products are always great to see and will encourage countless conversations across the industry and hopefully with customers too!

What's the bottom line

As we inch closer to Christmas, the retail industry must navigate a landscape shaped by rising sales values, dwindling volumes, and increasing levels of consumer expectations. Promotions like Black Friday are likely to offer both genuine and perceived discounts, although the overall promotion and discount approach poses a challenge to balance volume and profitability.

2023 has highlighted many trends and themes which will continue as we head into peak, offering opportunities and plenty of challenges. It will be important to balance the vigilance against crime (and the customer and colleague impact of this) whilst also embodying the spirit of Christmas.

Christmas should also be a time for caring. There are many people around the world who approach this Christmas in a distressed state, for a whole number of different reasons. Consider what you can do to spread a little Christmas cheer and goodwill to all.

2024 incoming

With 2024 on the horizon, the time is ripe for retailers to reflect, adapt, and strategise. Planning for the year ahead means you must leverage the latest insights, refine strategies, and harness the appropriate opportunities to respond to changing consumer behaviours, fierce competition and continuing economic challenges. If you'd like to make the most of the new year, ask me about my Strategic Roadmap sessions, helping you and your team to understand the evolving retail market and find the right approach to win.

Join the conversation

Thanks for reading and I'd love to hear your thoughts. What are you expecting or focused on over the next 100 days?

Please share your thoughts in the comments, or send me a private message.

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