As far as retailers are concerned, Father Christmas seems to have got stuck in the chimney.
As far as retailers are concerned, Father Christmas seems to have got stuck in the chimney. For businesses such as D2 and Hawkin’s Bazaar, the so-called golden quarter brought not seasonal cheer but the arrival of the administrator. They are comparatively small and weak retailers, but some bigger industry names, while not in such a parlous state, will have found that the festive period failed to live up to its name – the trading statements now being issued provide testament to that.
So is it a bloodbath on the high street? Only up to a point. Conditions are bloody but the best retailers are coping as well as possible, and will weather the harsh environment. And it will remain harsh. That was clear from Next’s seasonal update, which revealed that profits next year are likely to be “only slightly up” on this year.
The prospect of another year of slog will have chilled the hearts of many retailers, but Next has actually held up well. Store sales were described as “slightly disappointing”, despite a weak comparative period. Although shops were under pressure the business as a whole – powered by the Directory – notched up revenue growth. Profits will be up this year and the retailer refused to discount early.
Others can learn from Next’s strategy, including setting realistic and conservative sales budgets, keen cost control and expansion of multichannel operations. It sounds simple, but the success of each of these broad approaches relies on detailed elaboration and consummate execution.
As Next pointed out, 2012 is likely to bring continued pressure on consumers. But its strategy should see it through. Other retailers wondering how to navigate torrid conditions might do well to replicate its methods.
What is your iPad?
When every penny of spend has to be fought for, retailers should ask some fundamental questions, including whether they are selling product shoppers actually value and why shoppers should choose them rather than a rival.
Consumers have shown themselves willing to splash out in the past year on goods they genuinely value. The iPad must be the most obvious example. What is your iPad?
And, still in a technological vein, how are you selling? John Lewis’s Christmas numbers showed the importance of multichannel options, just as some of the recent failures show the weakness of too much focus on stores.