‘Tis the season to be thrifty

At Christmas, you’d have thought the retailers would be raking it in. From what seems like the end of summer, we’ve been offered bath salt gift sets and selection boxes to give to our loved ones. It’s the time of year when socks and oranges become not only acceptable, but desirable, gifts. Even after we’ve spent all our hard saved pennies and settled down to a meal large enough to feed a small village, we’re lured back into the January sales. Yet recent sales figures appears to show that Christmas consumerism has become yet another casualty of the recession.

High levels of unemployment, expensive and hard-to-get credit, and uncertainty over economic recovery let alone the future of the Eurozone has led many people to rein in their Christmas spending. Anxiety over slow December sales forced many retailers to cut prices pre-Christmas in efforts to entice shoppers to spend, whilst the Boxing-day sales saw prices slashed to lower levels than normal. Fantastic news for the thrifty shopper; less so for the struggling stores, for whom Christmas is usually a successful time of year.

That’s is not to say that all shops have lost out. As always, there are winners and losers. Rather than cutting spending completely, shoppers have given priority to quality, shown by the surprising success of the high end stores. By contrast, the dawn of 2012 has seen the disappearance of stalwarts of the British high street La Senza, Barratts and Hawkin’s Bazaar, their fate sealed by disappointing pre-Christmas sales. Who could be next?

Clothing and homeware store Next’s figures show the dominance of internet sales over high street stores. Despite a 17% increase in online and catalogue sales, falls in in-store sales which comprise of 2/3 of the firm’s total sales, resulted in an overall gain of just 3%. With better choice and easier comparison between stores, the growing trend for Christmas shopping online has seen online retailers like Amazon, Play and Firebox flourish. It has become clear that the nature of shopping is changing.

The John Lewis Partnership seems to be the overwhelming success story of the otherwise gloomy Christmas period. Waitrose, the luxury supermarket, has seen a 49% increase in online sales, with the week before Christmas yielding their highest ever sales. John Lewis, department store of choice for generous pyjama-clad children everywhere, has seen massive increases in household goods and fashion sales leading to a massive 9% year on year increase. Love it or hate it, no one could deny the effectiveness of their emotive advertising campaign to raise the store’s profile, estimated to have increased revenue by £600m. By advertising the experience, they successfully positioned themselves as the store for gifts.

The overall health of the retail sector in 2012 is likely to depend on, rather than be a catalyst for economic recovery. It is estimated that one in seven shops lie vacant, a figure set to rise as people shop online for cheaper products. Even those stores able to continue their high street operations would see profits eroded as online competition slashes margins. Yet the boost in activity in the post-Christmas period have indicated hope for the coming months. Whether this is a result of consumers rushing out to spend their Christmas vouchers remains to be seen. But if stores can sustain this level of discount, there may be hope for the high street yet. Meanwhile, the retail industry needs shoppers. With massive sales and the promise of the next loan instalment, I for one am only too happy to help.