What can retailers learn from consumer spending habits during the golden quarter of 2015 to help them succeed in the year ahead?
The decorations are down, the Sales are on and trading results are being announced: the post-mortem on Christmas 2015 has begun.
We’ve been analysing our own data to try to bring clarity to three of the biggest stories of the festive period: the impact of Black Friday; the success of online trading; and the demise of the high street. All three have been much debated, but our data suggests the truth isn’t as straightforward as the popular narrative.
1: Black Friday stopped consumers from shopping nearer to Christmas
False. It’s true that record levels of spending occurred on Black Friday (and were strong across that weekend) but our data suggests that didn’t stop the buying cycle closer to Christmas Day. December 23 was again the busiest day for in-store sales, reflecting the previous tradition of consumers heading to the shops at the last minute. The shape of Christmas spending reflected previous years, even if the spike at Black Friday was more pronounced than previously.
Overall, from the start of Black Friday week through to December 31, spending on Visa cards totalled £48bn, up more than 9% year on year. That’s reflective of the whole economy of course, not just pure retail, but it does suggest a higher level of consumer spend than in 2014. Black Friday’s effect on profit margins is a different matter, and it remains to be seen if the industry can stomach it for another year.
2: People shopped more online this year
True. Our data shows online spending rose significantly across the festive period. Black Friday marked the start and across that four-day weekend online sales grew by 22% compared with 2014. The scale of online growth is demonstrated by the fact consumers spent more online every day in December 2015 than on Cyber Monday in 2012, which at that point was the biggest ever online shopping day.
Consumers also shopped online closer to Christmas, as retailers drew in custom with later last-order dates. Click-and-collect will have been a big driver of this growth too. Our data shows that for the seven days before Christmas, online sales were up 28% compared with 2014.
3: The high street is in terminal trouble
Perhaps not. Yes, growth was slower, only rising 3% year on year for the Christmas period. As noted above though, people still spend in store in great volumes, while click-and-collect services entice shoppers to spend again once there.
Our research also shows that people who regularly make transactions on their smartphone are strong web-roomers. Nearly half (47%) say they behave this way, browsing online and then buying in store. Likewise, 74% do the opposite – so-called showrooming. In both cases behaviour is stronger among younger generations. The high street may not be the growth engine it once was, but its role in the purchase cycle still holds importance, regardless of where the final transaction takes place.
So what does this mean?
The way we shop and expectations of the experience have changed. In the short-term, retailers may have to continue to live with the public’s discounting psyche. While less than ideal, the data suggests it isn’t the death-knell for the busiest part of the retail year.
Elsewhere, it’s time to recognise, embrace and cater for the omnichannel shopper. It’s a great time for British retailers to embrace a strong mobile strategy for every customer touch point. All the signs from this Christmas point to the relevance and need to do so.
Get the multichannel offer right, satisfy customers who want an engaging, personalised experience when they shop, and get ready to do Christmas all over again in 11 months’ time.
- Kevin Jenkins is managing director UK & Ireland for Visa Europe