Christmas 2015 wasn’t the most forgiving for UK retailers. Persistent rainfall, above average temperatures, Black Friday discounting and the Paris terrorist attacks all contributing to far fewer Brits visiting the high street.
In fact, according to Ipsos Retail, high street visits fell 1.8% year-on-year in the week before Christmas. However having a compelling online and click and collect proposition in place looks to have been the key to avoiding the overall retail slump.
High street stalwart Marks & Spencer has been the biggest casualty so far as like-for-like sales in its important general merchandise division were down 5.8% for the 13 weeks ending 26 December; the festive performance representing M&S’s worst ever performance in the category.
Its soon-to-be-departing CEO Marc Bolland was very clear with his excuses: “In fashion, we faced challenging trading conditions and fell short on availability.
“However unseasonal weather impacted sales across the clothing sector and resulted in unprecedented levels of promotional activity in the market, starting from Black Friday and intensifying through December.”
Next has somewhat of a bulletproof reputation in the City having consistently delivered sales growth over recent years. Yet even it suffered over the festive period.
For the period between 26 October and 24 December, Next posted a “disappointing” performance as sales at its high street stores fell 0.5%
Most telling was its under-performance online. Although its Next Directory business, which includes online and catalogue sales, posted a 2% increase in sales, that was below the 10% growth the year before.
“We believe that Next Directory’s disappointing sales were compounded by poor stock availability from October onwards,” Next said in a statement. “In addition, the online competitive environment is getting tougher as industry-wide service propositions catch up with the Next Directory.”
Why online is so crucial
Next looks to have been referring to British retail industry darling John Lewis when it bemoaned the strength of its rival’s online operations. Over the six weeks to 2 January, John Lewis’s online sales were up 21.4% – meaning ecommerce now represents 40% of the department store brand’s total sales – as total sales rose 5.1% over Christmas.
Complaints about rain or an uncharacteristically warm December were noticeably absent from the John Lewis headlines.
“Investment in online fulfillment and infrastructure is now critical to the future prospects of any retailer in the digital age,” says Conlumino’s Anusha Couttigane, who says John Lewis is succeeding due to “taking a digital first approach” and recognising that “convenience is now imperative to the customer”.
She adds: “Notably, online still accounts for a much lower proportion of sale at M&S and say Next compared to some of their biggest rivals. If M&S can maintain this online growth trajectory in the short term and increase the proportion of its sales transacting online, it will make a significant difference to its struggling GM business.”
The online approach at John Lewis also saw click and collect sales rise 16% compared to the previous year, with 35% of its online orders collected from a Waitrose store. The strong multichannel numbers were mirrored by high growth on smartphone and tablet orders, which were up 31% and remain John Lewis’ fastest growing channel.
Attempting to match the online expertise of the likes of John Lewis and Amazon – with the latter benefitting from one hour delivery slots – is driving Sainsbury’s decision to purchase Argos owner Home Retail Group, according to Kantar Retail’s VP of research Ray Gaul.
He explains: “The speed of delivery and having a proper click and collect infrastructure is the big battle in the UK market right now, with Amazon drawing first blood by allowing 60 minute deliveries.
“Clearly Argos and Sainsburys working together will keep them in the fight with Amazon, while also delivering more options and faster services to their combined customers.”
Digital focused Christmas marketing wins out
It isn’t just sales that are benefitting from a digitally-savvy approach, with the Christmas marketing battle won by retail brands that have looked beyond the TV campaign to boost engagement with consumers on digital and social.
Topping a list of 13 retailers, Aldi achieved a final score of 281 points for its festive marketing activity between the period of 2 November to 27 December, according to a brand health study by Waggener Edstrom (WE), which assesses the overall impact of each retailer’s Christmas advertising according to a range of metrics including engagement, personalisation and sentiment.
In particular, it was credited for its reactionary John Lewis spoof and its #Aldifavouritethings social media campaign, which was a major continuation of its TV campaign and saw consistent smaller activations across social media.
|Brand||Score (2 November to 27 December)|
|John Lewis||259 points|
For the Christmas index, WE scored each retail brand’s TV ad and how it was perceived by UK audiences (with scores of 1-5 points in categories such as engagement, personalisation and overall sentiment) as well as how the retailers maintained and sustained their respective campaigns in the build up to 25 December. It did this by tracking dialogue from when the ads first went out and then all subsequent engagements across Facebook, Twitter, Instagram, blogs, forums and news sites.
In second place was M&S with a score of 260, with its social media-centric ‘Pass The Parcel’ competition helping to drive high engagement levels.
However, John Lewis’s more traditional approach did not fit with its forward-thinking approach to multichannel retail, according to WE’s head of digital and insights Gareth Davies.
“John Lewis relied too much on the ‘one big hit’ to drive discussions. While its TV advert did dominate the conversation, analysis showed that despite high engagement the British public did not look beyond the TV advert,” he explains.
“We saw very little supporting activations from the brand and as a result they continued to score below those retailers who did continue the story on social networks.
“While it is very unlikely that Aldi would have achieved as much success had they not taken John Lewis head on, the retailer continued to bridge its campaign platform through a series of smaller activations. It was Aldi and M&S who took the ‘Go Everywhere’ strategy to heart and succeeded.”
For the retailers still to update the market on their Christmas trading sales, it is likely those that could marry a cohesive multichannel strategy with a digitally-savvy marketing campaign will be the big winners.