Retailers facing most unpredictable Christmas ever, says SAS UK & Ireland

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmail

Andrew Fowkes, head of retail centre of excellence, SAS UK & Ireland, on why this is the most unpredictable time of the year for retailers and what they can do to make the most of it

Once upon a time, the festive countdown began when towns and cities switched on their Christmas lights. We all sat at home, eagerly waiting for Christmas adverts to debut. Retailers could plan based on the number of weekends left until Christmas. But last year, all that changed – the Black Friday phenomenon arrived in the UK and totally changed the way we shop for Christmas.

This year, Black Friday week is expected to be more popular than the week before Christmas for festive shopping. One in five British shoppers plan to go bargain hunting, with 25- to 29-years-old being the most likely group to shop during that week according to our research. Younger age groups are notoriously difficult to predict as they are the most likely to compare prices online and are more open to purchases via different channels, including mobile. It’s putting retailers on the spot as so much of their revenue will be determined by a single day’s trading. Amazon and Argos have even started their Black Friday sales three weeks early to bring some order to proceedings!

But, retailers be warned. Brits may love a good price – three in four (75 per cent) of us are primarily motivated by price and half of us (51 per cent) are motivated by getting a bargain. But just under half of us (46 per cent) by the product being in stock. Even if retailers tick all the boxes to win over consumers, long queues are one sure way to lose sales. Consumer tolerance for bargain hunting is limited to one-minute for each one per cent discount when waiting for a store to open. This ‘patience ratio’ drops to about 40 seconds for each per cent discount at the checkout.

It all means retailers are facing the most unpredictable Christmas shopping period yet. Black Friday has changed market dynamics from a fulfilment and a predictability perspective, and for many retailers it’s set to be the busiest trading day this year. Price wars are extremely difficult to forecast and cater for when squeezed into a shorter timeframe. If retailers don’t attract enough customers they lose out, but if they can’t deliver on what they promise they also lose out.  It’s a difficult balancing act. And it doesn’t end there. The channel used must be evaluated – John Lewis announced earlier this year that it would now be charging for its ‘Click & Collect’ service as it was costing them too much to deliver it free of charge. Regional variations and weather patterns complicate the picture too.

Data analytics can spare retailers a nerve-jangling finger-in-the-air experience this Christmas. By extracting insights from analysis of data, it gives them the ability to make evidence-based decisions as to what is driving demand for which customers, when and via what channel based on their habits and preferences.  Only then can they make sensible decisions about pricing, stock levels and optimising their resources and supply chain.

It’s intriguing to see what happens next and who the winners and losers are.  Some US retailers, such as REI, have even pledged to remain closed on Black Friday this year – basically removing themselves from the game. One factor is that it’s a holiday period in the US, being the Friday after Thanksgiving, so there’s some feeling it should be a quiet time with friends and family rather than a time for frantic shopping.

To find out more about UK consumer spending habits this Christmas, check out the key findings from our 2015 SAS Christmas Shopper Survey.