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Mike Stephenson, MD.
If there’s one thing we can predict about Christmas this year it’s that it will be unpredictable. The peak period of the retail year always brings surprises – and not just the kind that come in glittery wrapping paper.
One thing that never comes as a surprise is the incredible buzz we experience at ILG as we rally all our resources to support our clients in fulfilling the massive volume of Christmas orders. It’s a phenomenally busy period and we have to do everything we can to make sure we’re ready for it. While history shows us that we cannot predict Christmas retail volumes with real precision, we can gather insight from recent trends that helps us to plan for this crazy period and take advantage of the opportunity to score big points for our client brands.
The figures from the last 12 months indicate a general upturn in retail volumes and the likelihood of a sustained period of healthy sales throughout the months leading up to Christmas. Black Friday 2016 was again a peak sales period in the UK, with total spending reaching £5.8bn* over the Black Friday/Cyber Monday weekend. That marked a 15% year-on-year increase, reflecting a continuing overall upturn in retail sales. The Office for National Statistics reports that July 2017 was the 51st consecutive month of year on year increases.
While UK sales figures pale by comparison with China, where 11th November – Chinese Singles Day – saw consumers spend £14.2bn, the signs are that retailers here have every reason to gear up for a big increase in orders over the next three months. For me, there were three standout trends over the last year, which we’ll be applying to our preparations for the Christmas period this year.
In 2015, order levels were very similar for September and October and we didn’t begin to see the Christmas uplift until November. In 2016 this changed. We began to see orders increase from October, which resulted in an 85% year-on-year increase, the biggest of all the peak months and 20% higher than the overall rise for whole peak period. October orders were also 28% up on the previous month and while we thought this might impact on November, the uplift continued with a 29% increase on October – the same steady climb as we saw in 2015 – and remained steady in December.
Many retailers in 2015 had experienced huge pressure on their stores and logistics network as a result of Black Friday. The headlines told of websites crashing, orders being delayed and crowds of people swamping the in-store checkouts. Many retailers and brands made plans to avoid this in 2016, either by opting out of Black Friday altogether, by only running Black Friday offers online or by running offers over a longer period of time. Even so, we saw a huge 109% uplift in orders on Black Friday itself compared to the previous year, and an even bigger year-on-year increase of 129% for the week that followed.
The shift among retailers to more of an online focus for Black Friday saw online spending over the weekend increase 20% from 2015 to £2.8bn*. This corresponded with an increased market share for e-commerce within the overall growth in retail spend. Consumers are now spending an average £1.1bn** each week online across all sectors and online sales for July 2017 accounted for 16% of all retail sales during the month, up from 14.5% the previous year. Take online food sales out of the equation and the growth was an even more pronounced 20% year on year.
With October now upon us and the first baubles appearing in the shops, we’ve been working with our clients to make sure we’re prepared for another bumper Christmas period. Whatever contingencies we put in place, however, experience tells me we can be sure of a surprise or two somewhere along the way.
*Centre for Retail Research
**Office for National Statistics