2019 was retail’s annus horribilis: if you survived it, you can survive anything

closing down sale retail

I said it at the start of this year if you’re a brand or retailer and you can make it through 2019 and into 2020 then you’re probably going to be alright. This year has been tough, very tough, and we’re well into the most important segment of the year for some retailers. It’s do or die for many brands who are on their uppers while trying to flog customers theirs.

This period of physical retail contraction is more painful the larger you are and we’ve waved goodbye to some very well known retailers and brands this year. which could no longer survive under the perfect storm of online competition, retail saturation and squeezed prices, increase in the minimum wage, Extinction Rebellion/consumption debate, Brexit uncertainty and a snap General Election, cost of returns, prolonged discounting and soaring business rates and rents.

Christmas has always been a crucial time for retailers, but if it’s your single focus and main time to make profits then you need to rethink your business model and marketing. Many businesses with this old fashioned idea are many of those disappearing or have disappeared. But, it still matters, and a bad Christmas period will see many more retail business announcing their demise come the new year.

The lead up hasn’t been good, but a lot of spend could be skewed by the juggernaut of Black Friday. Retail sales decreased by -1.3% in September 2019, the worst September since BRC (British Retail Consortium) records began in 1995.

The following month, high street shoppers bought +0.6 per cent more goods in October 2019, representing a drop from +1.3 per cent sales growth recorded in October 2018, but still representing the retail industry’s best performance since April, according to figures compiled by the BRC and KPMG. Looking at a three-month average, which allows for month-to-month fluctuations, total in-store sales of non-food items dropped -3.6 per cent, while food sales grew +1.6 per cent (or +0.5 per cent on a like-for-like basis).

According to Barclaycard: “consumer spending in November (2019) showed a muted +0.9% growth year-on-year as Brits plan for a frugal festive season”.

So far, so bad, but Black Friday was the biggest ever. According to retail intelligence firm Springboard, retail footfall on Black Friday was up +3.3% in comparison with the same day in 2018, with shoppers mostly hitting the shops after work.

Black Friday spending rose +16.5% on 2018, Barclaycard said. They said spending was higher as of 10am that morning and “sustained” that high level throughout the day. They said the number of transactions then reached a “new peak” between 1pm and 2pm on Black Friday. Barclays, which has been monitoring real-time transaction data for Black Friday, processes almost £1 in every £3 spent in the UK.

“We recorded a new peak of 1,184 transactions per second between 1pm and 2pm, which is up on last year’s 1,087 by around nine per cent,” Rob Cameron, CEO of Barclaycard Payments said.

“The volume of transactions has been up all week and in terms of purchasing, we have seen a high level on spending from midnight all the way through.

“This is fantastic news for retailers, with our data showing that transactions have also been strong throughout the week,” said Cameron. “With many retailers spreading their deals out throughout the week, they will be encouraged to see this hasn’t cannibalised sales volumes on Black Friday itself.”

The volume of transactions on Black Friday rose +7.2% year-on-year, while the volume of transactions on Cyber Monday – which took place yesterday – was up +6.9% at the time of reporting.

While this discounting could affect margins, it appears the hype of Black Friday and perceived discounts is something retailers are taking advantage of. The consumer title, Which? warned that few real deals were available, with most goods cheaper or available for the same price at other times. It found that just 4 of 83 products they studied last year were cheaper during the Black Friday promotions.

Black Friday benefited from falling on or just after payday this year with many people paid on 28th of the month. Black Friday has been big, but has it been big enough? The last few years saw many retailers see a wash of sales just before Christmas which allowed them to limp on into the next year. 

It appears that retailers are finally understanding how to play the Black Friday game; getting rid of unwanted stock while holding firm on in-demand products. It will be interesting to see the level of returns and this giant spike can be difficult to manage, especially for smaller retailers which less stock holdings.

However research by TheIndustry.fashion for its Black Friday 2019: Will The Shoppers Come Out And Will They Shop For Fashion? report suggests that statistically consumers are no more likely to return an item bought during Black Friday than they are at any other time. In our survey of 2,000 consumers, 57% say that buying during Black Friday has no bearing on whether they return an item or not with a further 27% saying they are, in fact, less likely to return it. Only 13% say they are more likely to return a Black Friday purchase. But clearly a higher volume of sales means a higher volume of returns.

It’s clear from the various retail figures that the consumer was holding tight until Black Friday. It will be interesting to see, now those purse strings have been loosened, whether the spending continues in the final few weeks until Christmas, especially with the distraction of a General Election bang in the middle of that period.

See you in the next decade?