It would seem be that Amazon won Christmas. Or at least that is the view of most analysts.
In common with most Christmas holidays when journalists seem to loose the will to write anything intelligent, opnion on what is happening on the High street seemed to change daily. It went from anything up to 5% down to a ‘sudden rush on the last three days’ to record boxing day sales . All the indicators pointed to a good Christmas, wages starting to rise, low inflation, falling unemployment, fair economic outlook, but none of this seem to translate into the festive spend.
I think the reality of what happens at Christmas changed a number of years ago even pre-dating the impact of online retailing. The festive season is undoubtedly the most important consumer spend. However, a few years ago , when ‘Boxing Day ‘plus sales started to have an impact on pre Christmas shopping habits, the consumer started to become more canny. In the last three years Black Friday has exacerbated this trend. I feel that consumers are tempted to spend on things they really don’t want, but that is irrelevant as the money is taken out of the spending pot.
Whilst ,apparently, online still only accounts for approximately 10% of retail spend, though I suspect this is much higher in the last quarter, this is very significant in the scheme of things. Many retailers say they only make their profit in the last three months of the year. That 10% could well be their profit. Hence many retailers,big or small, are feeling the pinch.
It is not all plain sailing for the online operators. There are a number of significant players who have had a tough Christmas eg The Home Retail Group (including ARGOS). Ocado shares have just taken a hit because Amazon is increasing its food offering. But Amazon is a different beast. Like it or loathe it, it is a trusted brand for the consumer. The consumer knows that can order what they want, get it when they want it, at a price they want, and if they don’t like it send it back at no cost . All with very little effort. There are very few market place brands that curry so much consumer support. Whilst Amazon is seen as the site to go for price , it is much more than that, it’s primary driver is to satisfy the needs of the consumer.
I am no apologist for Amazon, and I might refer to it an awful lot but that is because I strongly believe it is and will be for the immediate future the key ‘shaper’ of not only our own market but that of most other retailers. We might not like it, and there are many of those within our industry who don’t, but we cannot ignore it. If anyone were to ask for a prediction for 2016(nobody has yet) it would be that our changing market will continue to change , albeit quicker, and Amazon will have played a part in those changes.. The secret will be knowing what those changes are going to be.
A very happy, healthy and prosperous 2016 to all.