November 25 – a date that, this year, is more significant in the retail calendar than ever

Putting this year’s Black Friday deals extravaganza to one side momentarily, it’s a date that marks one month until Christmas – a time when retailers assess festive spending to date and ramp up efforts to secure sales before Santa’s sleigh dashes through the snow.

Just in case we didn’t know it before, noises from across the industry this week have only served to emphasise that retailers, much like Mr Claus, are in for a bumpy ride this Christmas.

Against a backdrop of rising interest rates, spiralling energy bills, rampant inflation and fragile consumer confidence – plus the unique addition of a winter football World Cup – we are in the midst of one of the most difficult and unpredictable golden quarters in living memory.

It was no surprise then to hear John Lewis Partnership chair Dame Sharon White tell the Confederation of British Industry’s annual conference that there were “all sorts of things going on with consumer spending”.

White suggested that some customers were shopping early and looking to treat family and friends after two Covid Christmases.

Others, she said, were budgeting, phasing their spending, switching to value own-brand ranges and being “much more thoughtful and intentional” about how they spend.

“As times get tougher, retailers must think carefully about what they stand for”

She warned that inflation was “hitting the top line” and reiterated that the turbulent trading environment meant it was “going to be tough” for the Partnership to pay a staff bonus at the end of its financial year.

John Lewis will not be the only major retailer feeling the heat while the mercury plummets.

As times get tougher, retailers must think carefully about what they stand for, the additional services they can offer their customers and the product categories in which they focus their sales efforts if they are to come through the next month unscathed.

Take cycling and motoring specialist Halfords, for instance. It revealed that service-related sales – including vehicle MOTs and repairs – rose by £109m during its first half and now account for around a third of group sales. Retail sales, by contrast, declined 7.1% to £500.5m.

Halfords boss Graham Stapleton said the business was focusing on “predictable and recurring revenue that comes from motoring services and needs-based products”, insulating itself from the slump in discretionary purchases as consumers tighten their belts.

Although its stock availability in cycling is “strong” heading into Christmas, uncertainty about demand for those products swirls. Yet Halfords’ service division should continue to motor, even if there are fewer mountain bikes under the tree this year.

A similar approach at Marks Electrical has already helped it gain ground on rivals like AO. Marks has grown rapidly amid its focus on distressed purchases of white goods and free next-day delivery for customers urgently needing to replace essential products like fridges and washing machines.

“Being ‘sellers of stuff’ is no longer enough for shoppers, even during the holiday season”

By contrast, AO, which reported widening losses this week, said the squeeze on household budgets had driven “a reduction in the overall electricals market”, including reduced spending in discretionary categories like gaming, consoles and smart tech, to which it is more exposed than Marks.

As Halfords and Marks prove, being ‘sellers of stuff’ is no longer enough for shoppers, even during the holiday season.

But it’s not just services that can convince shoppers to part with their cash this Christmas. Hammering home your quality or value credentials at either end of the market spectrum can go a long way towards delivering some much-needed Christmas cheer.

Iconic footwear brand Dr Martens may have warned that trading has been “variable on a week-to-week basis” during October and November, but its boss Kenny Wilson maintains that its strong brand and reputation for quality will drive sales in the right direction during December.

“We know it’s an investment purchase for people, but it’s a sound investment purchase,” he tells Retail Week.

“When people’s money is tight, and there’s no doubt that money is tight right now, people invest in quality products. With Dr Martens, they know that they’re getting something that is going to last.”

At the other end of the price scale, Aldi trumpeted this week that 2022 would be its “biggest ever Christmas” as shoppers seek to conserve cash during the cost-of-living crunch.

Echoing the words of White, Aldi’s UK and Ireland boss Giles Hurley suggests shoppers have “started to think about Christmas even earlier this year” and that “many households are having to plan their spending over the festive period much more carefully”.

Price will undoubtedly be a key factor in shoppers’ purchasing decisions ahead of December 25 – inevitably meaning a bumper few weeks for value players like Aldi – but there are lessons for those in the dreaded squeezed middle, and for multicategory retailers like John Lewis.

Investments in price must be carefully curated in categories and products that can lure shoppers into stores and create opportunities to drive halo spend on higher-margin ranges.

That is much easier said than done, of course. And as the demise of Made.com and Joules in the past month alone has highlighted, retail’s fortunes will once again be polarised.

So, buckle up – it will be a merry Christmas for some, but for others a good night. 

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