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Can You Hear Those Sale Bells Jingling?
Jingle bells, Christmas sells … or does it? The festive season is just around the corner, and retailers are ‘freaking out’. Will sales drop, is retail dead, or is it just scaremongering?
From pre-Christmas to Boxing Day, retailers have gone in full force for the festive season. In 2018 the sales throughout Christmas dropped despite a 0.4 per cent rise in November.
This Christmas a similar worry has swept across retail this year. From the reports by the NAB regarding the drop in Christmas confidence and SMEs feeling the pinch across brick-and-mortar, it’s easy to see why many retailers aren’t feeling too jolly this season.
According to the Spotlight Series – Sales Events: Growing and Evolving, 34 per cent of shoppers have a ‘very sophisticated’ understanding of gift-based sales events, including Christmas and Pre-Christmas.
Is It That Bad, Though?
According to a recent report by NAB, consumer anxiety has risen around the idea of debt and rising house prices. This can play a heavy role in the retail space, too. “When we ask Australian consumers what worries them, the cost of living is consistently at the top of their list,” explained Alan Olster, NAB Chief Economist. “Some of these costs (food, alcohol, clothing, housing, health expenses, transport etc.) worry some consumers more than others, and these are the costs consumers often think of most when determining their true cost of living.”
Regarding Christmas however, retailers are increasing their anxiety levels, too. The festive season is an intensely busy time for everyone involved, and here are more trends to follow than is possible. From scheduled payments to free shipping, it is getting harder to accommodate to customer’s evolving shopping habits.
It’s not all doom and gloom, of course. Despite a drop in sales across the board, there’s a rise of BNPL purchases and online shopping. During the Christmas period, 72 per cent of Christmas shoppers choose to shop in a physical store – but mobile is steadily on the rise, with online purchases making up 10 per cent of all purchases.
Can BNPL Save Retail?
According to ASIC, in 2018 there were an estimated two million users of BNPL platforms. The use of these platforms can encourage shoppers to spend a little bit more money at one store rather than seek alternative products from somewhere else.
According to the Power Retail Spotlight Series: BNPL, ’90 per cent of online shoppers use the payment schedule platforms on subsequent purchases’.
Seventy-nine per cent of shoppers also use the service to better support their cash flow, while 27 per cent use it to budget their finances better for larger purchases. Moreover, almost every retailer (94 per cent) who took on BNPL wanted it to increase conversions. For 74 per cent of retailers, BNPL delivered on that requirement.
Christmas is no doubt going to be huge for BNPL, so it may just help retailers make those extra sales. “Contrary to popular beliefs about overspending at sales events, the vast majority of shoppers appear to have actually spent slightly less ($348) than they had budgeted ($365). Presumably, this is at least partly due to achieving better discounts than expected which offsets any overspending on unplanned items,” said Mark Fletcher, the Insights Manager at Power Retail.
Are Holiday Sales Becoming Obsolete?
According to the Power Retail Spotlight Series: Sales Events, 84 per cent of customers think retailers are becoming too desperate throughout sales events. Moreover, 83 per cent of customers say these sales events are running for longer periods of time, which begs the question: are holiday sales becoming obsolete?
From Black Friday to Click Frenzy and Christmas, there are fewer days between the sales events, which blurs the lines for customers to save money. As the end of the year slowly becomes one giant sale, how will this affect retailers?
A recent report from Coresight predicts that if companies don’t sell the right amount of stock within the Christmas period, it could ‘force companies to use heavy markdowns in January to clear the shelves’.
Peak Purchase Times
There are certain times that customers prefer to make a purchase, Power Retail reports. In the Spotlight Series report, ‘the most popular time for online shoppers is between 6:00 PM and 9:00 PM – literally the ‘after work’ period’.
Age plays a huge role in this behaviour, though. The first hour after opening is also important to more than one in four shoppers (28 per cent) which rises to 38 per cent of shoppers aged under 25, the report found.
“The Power Retail Advisory Panel believes that these types of events have multiple advantages for retailers beyond just retaining margins as they have also proved effective in increasing brand awareness, new customers and brand loyalty,” explained Mr Fletcher. “The Panel also notes that growth in experiential shopping, in general, is being driven by Millennials who are well known for their penchant for multisensory stimulation. This means that experiential events will be driven by both increasing demand (as Millennials seek experiences) and demand (as retailers support non-discount based events).”
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