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Retailers predict drop in Christmas sales

Posted on: 18 Oct 2022

Almost half of retailers believe their sales will decrease this year, I discovered after conducting an informal survey this month. Over 45% also believe customers will spend less this Christmas. And all this comes at a time when the sector is facing rising energy and other business costs. To be honest, the survey findings didn’t come as a great surprise. They matched what I have been experiencing around me in the retail sector. More and more retailers around the country are holding their breath right now.

 

The peak trade stock that is dropping into stores this month was paid for months ago. So cash flow has been tied up and retailers just do not have the extra funds to deal with all the added expenses. Several businesses I spoke to fear they won’t survive the next few months because of the crippling cost of living crisis. This crisis is impacting brands and the people that work for them. But retailers also have much higher business costs in areas such as buying in stock or logistics.

 

The crisis is further complicated by the desperate need to recruit more staff. Nearly 80% of respondents to my recent survey said they need the Government to step in and help. From speaking to retailers myself, that help can't come next year - it needs to come now. Government support needed The retail industry is an incredibly agile industry - we saw that during Covid.

 

If the Government could help retailers help themselves, especially in the areas such as fuel, lighting and heating, they would get through this crisis. But there are some positive steps which retailers can take. Understanding how your consumer is responding to the cost of living crisis is key here. Let me explain: I do expect consumers to keep spending as we head towards Christmas, just a little more carefully.

 

We are basically seeing two types of consumers right now. First, there are those who have been badly impacted by the cost of living crisis. Second, there are consumers who may have savings squirrelled away. Either way, we find ourselves with a more cautious consumer.

 

Focus on value and experiences

So, the focus needs to be on value and experiences this peak season. Different parts of the industry will react differently over the coming months. Those selling discretionary spend products will need to deliver a hyper-personalised service and an excellent customer experience. They can achieve this by really understanding their customer, their needs and also their expectations. In the long term, this will drive customer loyalty. Well trained staff will be able to meet the needs and deliver superior service. Those selling everyday products will need to focus on price points and adding value to entice customers.

 

Adding value isn’t purely a price reduction. Expertise, click-and-collect, later opening hours, free shipping or free Christmas wrapping can also entice customers away from your competition. Engagement across all channels, including social media and email campaigns, should focus on the affordability and cost-effective solutions. And keep your eyes open for advice to help you through this crisis.

 

I share lots of tips and talk to a range of experts on my podcast, The Retail Tea Break . I have just launched season 3 and in the first episode, I talk to Owen Clifford, Head of Retail at Bank of Ireland. He offers his advice to help retailers through this difficult time. To find out more or to listen to the podcast visit www.theretailadvisor.ie or listen via your preferred podcast provider.