The Golden Quarter is retail’s busiest sales period. But in 2020, we can expect it to be completely different.
Written by Hannah Green
In 2019, the ‘Golden Quarter’ started early. Retailers launched promotions before Black Friday, eager to beat online flash sales.
Discounting continued towards December, which smoothed the usual Christmas sales peak. In 2019, across all categories, shoppers spent more and bought earlier for Christmas.
What will Christmas 2020 look like?
The past 9 months have had a huge effect on global retail. COVID-19 has disrupted customer buying patterns and introduced new health and safety concerns that shape how, when and why we shop.
Clothing, footwear and luxury goods are struggling. Even food purchasing isn’t close to the level of 2019.
Consumers are cautious with spending, due to uncertainty around Brexit and the impact of a pandemic. Moving to online shopping for the majority can mean retailers have fewer opportunities for increasing average spend, such as upselling at the till.
There is less customer loyalty to brands, people are now more likely to shop around to get what they need. The challenge for retailers is to meet the needs of online shoppers both in the products they offer and the experience they deliver.
The Flight to Digital
This ‘Flight to Digital’ as McKinsey calls it will have an impact on spending this Christmas. Online and omnichannel will be prevalent during the festive season, with 30 to 60 percent of consumers across countries reporting an intent to shift online for their seasonal shopping.
The impact on the high street of this is huge. Larger retailers have the spending power to reconfigure their operations, focus on Click & Collect and enhance delivery slots. Smaller retailers are trying to catch up. 11,000 of these closed in the first half of 2020, more than double that of the previous year.
The events of 2020 have dealt a hammer blow to retail with shifts in behaviour having a dramatic impact on the way we buy. Shopping as a leisure activity isn’t possible during lockdowns and this has led to a significant shift in priorities for UK consumers. The high street has fundamentally changed, with some smaller retailers disappearing. More and more of us shop online, resulting in strong sales and increased market share for larger retailers.
So what next?
Having spent my career working in the Retail Sector these are a few of my thoughts on the Golden Quarter in 2020, one which will be very different this year.
1. Sales
Sales in the 2020 ‘Golden Quarter’ are unlikely to exceed 2019, even with bulk buying online. Consumers are more cautious this year when spending, because Christmas means a greater financial challenge for many families experiencing furlough or loss of employment.
Currently, unemployment is at 4.8%, but that is set to rise in the new year. In 2020 we’re also seeing a dip in hospitality spending, with the demise of office and family Christmas parties during lockdown, sales can be expected to reflect that.
As more of us buy online, add-on purchases are less common. Shoppers are more likely to buy only what they need. This presents a challenge for retailers used to ‘topping up’ shopping baskets with valuable extras.
2. Discounting
Black Friday discounting began in early November. Amazon has been heavily discounting stock, so other larger UK retailers are trying to catch up.
The Co-Op has invested £50m in discounting 300 of its essential products and Waitrose has knocked down the prices of its top 200 essential products.
Discounting happened early in the Golden Quarter of 2019, it has already started with Black Friday promotions in 2020 and is likely to continue through the period. Sales could be steady but at the expense of Margin. A steady sales flow will better support Supply Chain Fulfilment. We will not see the true impact of this until January 2021.
3. Customer behaviour
A huge shift has happened in customer behaviour. Because of lockdown buyers are forced online where customer experience, personalisation and relevance become key drivers in the battle to maintain brand loyalty. Retailers are braced for a ‘Christmas like no other.’
John Lewis sold out of patio heaters and had to pull orders forward to meet demand. consumers are working out how to manage a COVID Christmas with innovative ideas. — barbecuing Christmas Dinner perhaps? And will these outdoor festivities mean a rise in sales of more practical winter wear over office party attire such as luxury clothing, evening wear and jewellery?
When buyers do venture out, they’re geographically cautious and sensitive to crowds. With our second lockdown extending until 2nd December, consumers are still currently favouring essentials over luxury items. This will likely impact Christmas, reverting to lower volumes of presents and reduced spending across most households.
4. Supply Chain
Logistics are under a huge amount of pressure. Some have been able to keep up — Yodel has increased its volume by 20% year on year. Other third-party carriers are having to support massive volumes of goods. Royal Mail has launched door pick-ups to support new buying and return habits.
The supply chain has felt the impact of the pandemic, especially at the peak. Discounting will likely continue, as buying for the Christmas season would have happened in April and May. Unless demand planning on forecast sales were correct, there’s likely to be a lot of excess stock left post-Christmas. We can expect to see even more clearances at the beginning of 2021.
Some cautious optimism
It’s not all doom and gloom though — I’m somewhat optimistic for 2021. Despite everything that has happened in 2020, there’s still a huge amount to be positive about.
Retailers have proven that they can be flexible, creative and fast to respond. Buyers might be cautious now, but with the clear hope of a vaccine in the relatively near future, we’re likely to see some optimism reflected in spending as we move into December.
And in the long term, if shopping culture moves away from conspicuous consumption toward quality and provenance, that can’t be bad. Perhaps we’re about to see a dawn of a new era, where smaller, quality retailers get a bigger bite of the cherry.