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Our Thought Provoking Insights

A marginal Christmas

First Black Friday. Now the pandemic. It’s getting much harder to work out what Christmas trading will look like.

History is less relevant today but everyone still thinks in year-on-year numbers. At first sight, December 2019 non-food sales look good – +4.2% by value year-on-year. They start to look less good when you factor in November which fell 1.9%. So Black Friday last year bombed. The trend of Black Friday clawing forward Christmas spend into November was actually reversed last year and December won back some business.

Clearly, Covid restrictions will be the overriding influence on Christmas 2020. Constant shifts in the regime make it very hard to be sure how it will look but everything points to it being severely constrained. Certainly, enough to adversely impact spending.

A key factor driving underlying trading economics this Christmas will be online. I predict online sales will break the 50% barrier for the first time. Last year’s number was 31% so it is likely that those retailers who have failed to significantly invest in expanding capacity here will struggle to fulfil demand. The critical trading impact will be around margins.

While I expect Christmas spend to be depressed, it may well not look so bad at headline level. Government support and lockdowns have made household balance sheets appear quite healthy, but looks can be deceptive. By Christmas the unwinding of the generous furlough scheme will have begun, and some erosion in confidence too. It is the underlying picture which is of greatest concern.

Christmas trading statements almost never take returns into account. Years ago when online was embryonic this was less significant. With half of all spend this Christmas online, those trading statements will effectively report gross sales. A very significant slice of those sales will be returned to customers, not just taking a large slice off revenues but wiping out margins too.

If anything here resonates and you would like to know more, do get in touch for an informal chat -



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