The spending cuts may have rocked consumer confidence, but this coming Christmas could be something of a jackpot for retailers.
It’s looking especially rosy for online operators. According to the IMRG Capgemini e-Retail Sales Index, total online spending for the fourth quarter of 2010 will reach an estimated £17.4 billion, up from £15 billion in Q4 2009.
The figures are resonant with bullish predictions from managers of online operations. Ruel Taylor, director of mobile phone accessory retailer Mobile Fun, expects to turn over £1 million this December compared with £900,000 last year.
‘We had a very strong Christmas performance in 2009 during a very uncertain economic period,’ says Taylor. ‘The recession didn’t really impact the spend of our customers then, and we expect even better results this time as we find that people are always keen to get their hands on the newest technology regardless of the economy.’
In order to make sure he maximises sales over the holiday season, it is crucial for Taylor to make sure he has the right products in place and that they are marketed correctly. ‘Our preparation is down to how the market moves as far as the handsets go, so for us now the urgency is to source our suppliers and ramp up the stock for key lines that we know are going to be in demand for December,’ says Taylor.
Fresh ideas
Moving with the market involves expanding product ranges. ‘Whereas last year we may have focused on mobile handsets, we are broadening our product range this year to include smaller personal computers and reading devices like the Kindle,’ explains Taylor. ‘In turn, we can focus on providing accessories for those products.’
Another way to ensure your company gets exposure just in time for the Christmas rush is by launching a new product. Elitemarket, an online retailer of luxury goods, is set to introduce a virtual malt whisky cellar and plans to structure special offers for specific and rare reserve whiskies to lure in trade.
Director and founder Andrew McErlain says, ‘The attraction for the user is the modern experience of coming into the virtual environment of a malt cellar, coupled with the discovery of certain whiskies for sale that you will struggle to find elsewhere.’
The company operates in separate “pavilions” that showcase different luxury brands in their recognised environments. For example, the ski resort pavilion presents winter sports brands in anticipation of consumers’ Christmas breaks. By the end of November, Elitemarket is looking to have ten pavilions live on the site, and over the period from December to the end of January McErlain expects £1 million in sales across the portfolio of brands.
Christmas rush
High street stores may have lost some trade to their online competitors, but there is still plenty that can be done to capitalise on the additional footfall of the Christmas rush.
Organic beauty products retailer So Organic has a shop in Greenwich as well as an online service. COO Stuart Burlton points out the differences between the preparations needed by high street stores and online operations.
‘When you’re an online company, you need to get your Christmas trade in October and November, because after the 10th or 11th of December your sales drop off as people are mindful of the importance of getting their purchases delivered in time,’ he says. ‘The brick-and-mortar store was fantastic last Christmas because people left it late to buy, and we’re expecting this year to be the same.’
Burlton is also optimistic about this year’s business volumes, predicting seasonal sales of £500,000 compared with last year’s £450,000. Part of the plan is to do an analysis on the best-selling lines from the previous Christmas. ‘All of our products are now in our warehouses ready for Christmas and we’re going with the brands that were successful last year.’ Other plans to boost trade include giving the website a yuletide feel, introducing a new catalogue and early-bird deals on certain lines.
Broad offering
Something else to bear in mind in the run-up to Christmas is making sure you offer a significantly diverse range of products.
‘We’ll have around 150 different gift sets to choose from,’ says Burlton.
‘It’s important to offer something for everyone as a lot will depend on consumer attitude and how public sector cuts affect the spending capacity of customers. I expect the market to be very price-sensitive this year, with people buying more products but cheaper ones. Everyone is looking at their credit card bills.’
Money wise
Given that consumers are strapped for cash, or at least wary about price, social networking company LivingSocial is hoping that market conditions will work in its favour as it offers discounts on deals and promotions.
Working on behalf of companies and taking 30 to 40 per cent commission on sales, UK managing director Peter Briffett says, ‘As Christmas approaches, we’ll look at more retail opportunities and steer our promotions towards Christmas-orientated deals. The knock-on effect is getting people into shops, allowing the merchants who use the service to increase sales and promote themselves in the run-up to the festive season.’
Not every retailer will experience the same customer buying patterns. Floor covering concern Carpetright will be seeking to boost its sales over the Christmas period by embarking on major radio, TV and press advertising in November.
However, the company sees a slightly different pattern of consumer behaviour to that of most retailers in December. Group IT and e-commerce director Ian Woosey says, ‘We have a lot of customers placing orders for flooring fitted before that month, and then over the actual Christmas period itself our stores go pretty quiet.’
From Boxing Day onwards, there is a second surge in demand. ‘Some people decide over the Christmas holiday that they should have had it done so we pick up again in January,’ adds Woosey.
Whether it’s through the web or high street stores, the success expected this holiday season is certainly encouraging. If the season turns out to be as merry as is being forecast, retailers may look back on the Christmas of 2010 as a turning point in their business fortunes.
Five Questions To Ask Yourself:
What were last year’s best sellers?
Are there enough new, exciting products?
Do you have enough staff and stock to meet demand?
Is your marketing timed and pitched correctly?
Will your special offers give you the edge?
