Abstract
The Christmas trading period is when the strength of a retailer' s proposition and business performance is tested to the utmost, and 2007 was no exception. There was pressure on consumer spending, partly due to the squeeze on credit and a gloomy outlook for the economy. This contributed to worse than expected trading conditions in December 2007, and by the middle of February 2008 the casualty list reads:
- Three fatalities - Dolcis (footwear) entered administration in the middle of January, Stead & Simpson (footwear) entered administration at the end of January, and The Works (books and stationery) entered administration in early February.
- Three seriously wounded - in the form of profit warnings from JJB Sports, DSGi and Land of Leather.
Given the extent of the slowdown in retail sales growth in December, things could have been worse if the slowdown had begun to bite earlier. The impact of weaker trading at Christmas will be long lasting, as this is such an important part of the trading year. The cost of clearing unsold goods in the Sales could impair year-end results.
Table of Contents
- Issues in the Market
- Main themes
- Definition
- Retail sales data
- Market in Brief
- Consumer caution in December....
- ...but Christmas trading is not just about December
- Spending patterns indicate higher spend than last year
- Clothing most widely purchased gift
- Home shopping won share (again)
- Trend to online maintained...
- Major grocers ahead of the average
- Christmas with a conscience
- Internal Market Environment
- Promotional discounts to drive footfall
- Advertising mainly price led...
- ... but evidence of narrower focus of discounts
- Blanket discount days shunned
- Longer trading hours
- Extended trading hours throughout December
- ... and increases security risks
- Last minute rush a feature of Christmas shopping
- Increased popularity of multi-channel shopping
- Greater confidence in online
- Figure 1: British Internet penetration at home/work/place of study or elsewhere, April 2002-October 2007
- ...but sizeable element still not convinced
- Greener orientation among consumers
- Greener mind set
- Increased spend on organic foods
- Safety of toys/shortage of toys
- Other factors
- Temporary shops causing concern to some occupiers
- Hamper companies kept a low profile
- PR gaffes
- Positive PR
- Broader Market Environment
- Credit crunch weakens consumer confidence
- December retail sales growth dipped badly
- Northern Rock crisis a wake up call for lenders and borrowers
- Overall indebtedness increasing
- Figure 2: Total amount outstanding lent to individuals, May to October 2007
- Rising energy prices
- Consumer spend remained resilient until December
- Employment figures remain positive
- Figure 3: Employment and unemployment, October to December 2003-07
- Underlying consumer spend resilient in 2007
- Figure 4: PDI and consumer expenditure, at constant 2002 prices, 2002-12
- EHT category delivering strong product stream of ' must have' gadgets
- Figure 5: UK population, by socio-economic group, 2002-12
- Population growth expanding the gifting market
- Figure 6: Crude birth and death rates, 1996-2006
- Life expectancy increasing contributing to extended gifting networks
- Figure 7: Trends and projections in UK population (' 000s), by age group, 2002-12
- Market in Context
- Key points
- Christmas comes but once a year
- Weakening of December contribution
- Figure 8: Seasonal analysis of retail sales value -- proportion of sales taken in December, by sector, 1995-2007
- Fourth quarter gaining in importance
- Figure 9: Seasonal analysis of retail sales value -- proportion of sales taken in fourth quarter, by sector, 1995-2007
- Strengths and Weaknesses in the Market
- Strengths
- Weaknesses -- inhibiting growth
- Review of Christmas Trading 2007
- Key points
- 2007 -- cautious forecasts were over optimistic
- Out-turn worse that predicted
- Home shopping the biggest winner
- Household goods retailers struggled badly
- Food retailers and non-food specialists gained share
- Figure 10: December: Year-on-year change in sales value, by sector, 2005/06-2006-07
- Strong fourth quarter for home shopping
- Figure 11: Fourth quarter year-on-year change in sales value, by sector, 2005/06-2006/07
- December gloom but overall a good year for retail sales
- Figure 12: Retail sales monthly change by value not seasonally adjusted, January 2006-December 2007
- Non-food retailers fought back in 2007
- Figure 13: Annual change in retail sales value, by sector, 2005/06-2006/07
- Christmas Spending Patterns
- Key points
- Spending patterns higher than last year
- Figure 14: Perceptions of spending compared to last year, Pre and Post-Christmas, October 2007 and January 2008
- Intention not to spend did not hold
- Who spent more than planned?
- Financing over spend through debt?
- Who spent what?
- Figure 15: Amount spent at Christmas on gifts for close friends and family, January 2007 and January 2008
- Young children get indulged at Christmas
- AB families spend over £500 as do other families
- Pre-family adults among lowest spenders
- Underestimation of what Christmas really costs?
- High spenders on Christmas gifts
- Figure 16: Average Christmas spending on gifts, January 2008
- Who spent more than planned?
- Internet benefited from higher than anticipated expenditure
- Christmas Gifting Patterns
- Key points
- What were the most popular gifts?
- Figure 17: Comparison of purchasing of gifts, January 2007 and January 2008
- Video games a big winner compared to 2006
- Intended and actual gifts bought
- Figure 18: Comparison of purchasing intentions with items actually bought this Christmas, October 2007 and January 2008
- Who bought what
- Figure 19: Profile of those buying the top 5 gifts at Christmas, January 2008
- Retail Competitor Analysis
- Key points
- All retail sales
- Food retailers reign in sales
- Morrisons
- Somerfield
- Waitrose
- J Sainsbury' s
- Booths
- Co-operative Group (food)
- Tesco -- UK only
- Thorntons -- own stores
- Majestic Wine
- Marks & Spencer -- food
- Aldi
- Asda
- Non-food retailers hold steady
- Mixed goods -- Non-specialised non-food stores
- Selfridges
- John Lewis department stores
- Liberty
- Mothercare -- UK stores
- House of Fraser
- Instore (formerly Brown & Jackson)
- Poundland
- Debenhams
- Marks & Spencer -- general merchandise
- Woolworths -- group
- Beales
- Clothing and footwear stores
- Primark
- Ted Baker -- retail sales (including overseas)
- Burberry -- retail sales (including overseas)
- Marks & Spencer -- clothing
- Next
- New Look
- Peacocks
- Household goods stores
- Furniture and furnishings retailers
- Dreams
- Dunelm
- Marks & Spencer -- Home
- Land of Leather
- Electrical goods retailers:Comet
- Carphone Warehouse -- Europe
- DSG
- DIY goods retailers
- Topps Tiles
- Homebase
- All other non-food specialists
- Booksellers and stationers
- Waterstone' s
- Clinton Cards -- Group (including Birthdays)
- WH Smith
- Health and beauty retailers:Lush
- Alliance Boots -- UK retail
- Photographic retailers
- Jessops
- Other non-food specialists including jewellers and sports goods
- Jewellers
- Theo Fennell
- Signet (UK stores)
- Sports and leisure
- JD Sports
- Blacks Leisure
- JJB Sports
- Music and entertainment retailers
- HMV -- UK & Eire
- Toys and games retailers
- Game -- UK and Ireland
- Non-store retailing
- Home shopping and mail order companies
- ASOS -- online sales
- Littlewoods Shop Direct
- Findel (home shopping)
- M and M Direct
- Ideal Shopping Direct
- Play.com
- Otto -- group online sales
- N Brown
- The White Company
- Amazon
- Ocado
- Online sales performance reported by primarily store-based multi-channel retailers
- The Perfume Shop -- online
- Debenhams -- online
- Marks & Spencer -- Direct
- John Lewis Direct
- Sainsbury' s -- online
- DSG International -- e-commerce division
- Waitrose.com
- Tesco.com
- Appendix
- Abbreviations
- Figure 25: Trend data for food shopping lifestyle statements, 2003-07
- Figure 26: Profile of food shopping lifestyle statements, 2007
- Broader market environment
- Figure 27: Net lending to individuals, August to October 2006 and 2007
- Figure 28: Total amount outstanding lent to individuals, May to October 2007
- Figure 29: Employment and unemployment, October to December 2003-07
- Figure 30: Crude birth and death rates, 1996 to 2006
- Christmas spending patterns
- Figure 31: Perceptions of spending compared to last year, pre and post-Christmas, October 2007 and January 2008Figure 32: Comparison of those intending to spend more with those that actually spent more, pre and post-Christmas, by gender, age, social grade, ITV region, presence of children, lifestage, Special Groups October 2007 and January 2008
- Figure 33: Perceptions of Spending compared to last year by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, Special Groups, supermarket used, January 2008
- Figure 34: Spending on Christmas gift for close family and friends, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, Special Groups, supermarket used, January 2008
- Figure 35: Comparison of those intending to spend more with those that actually spent more, pre and post-Christmas, by amount spent, October 2007 and January 2008
- Figure 36: Amount spent at Christmas on gifts for close friends and family, January 2007 and January 2008
- Figure 37: Comparison of amount intended to spend with amount actually spent, this Christmas on gifts for close friends and family, pre and post Christmas, October 2007 and January 2008
- Figure 38: Average Christmas spending on gifts, January 2008
- Christmas gifting patterns: Detailed demographics
- Figure 39: Items bought as Christmas gifts, by demographic sub-group, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, Special Groups, supermarket used, January 2008Figure 40: Items bought as Christmas gifts, by demographic sub-group, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, Special Groups, supermarket used, January 2008
- Figure 41: Items bought as Christmas gifts, by demographic sub-group, by gender, age, social grade, ITV region, working status, marital status, presence of children, lifestage, Special Groups, supermarket used, January 2008Figure 42: Profile of those buying gifts for family and friends, January 2008
- The consumer: paying for Christmas -- Detailed demographics
- Figure 43: Shopping behaviour at Christmas, by demographic sub-group, January 2008
- Figure 44: Shopping behaviour at Christmas, by demographic sub-group, January 2008
- Figure 45: Enjoyment and paying for Christmas, by demographic sub-group, January 2008
- Figure 46: Enjoyment and paying for Christmas, by demographic sub-group, January 2008
- Figure 47: Attitudes to gift buying by amount spent on Christmas gifts, January 2008
- Figure 48: Gift buying typologies by socio-demographic sub-group, January 2008
- Figure 49: Gift buying typologies by attitudes to Christmas gift buying, January 2008
- Figure 50: Gift buying typologies by Christmas Spend compared to the previous year, January 2008
- Figure 51: Attitudinal groups by Internet usage, January 2008
- Impact of the Internet on Christmas Shopping Behaviour: Detailed
Demographics
- Figure 52: Christmas shopping and the Internet, January 2008
- Figure 53: Christmas shopping and the Internet, by demograhic sub-group, January 2008
- Figure 54: Christmas shopping and the Internet, by demographic sub-group, January 2008
- Figure 55: Internet usage by amount of money spent on gifts at Christmas, January 2008
