20 Dec 2018
Retailers are dreaming of a black Christmas following a positive November amid difficult trading conditions – will it be more of the same in December or will Christmas be cancelled?
Phil Mullis, Partner and Head of Retail and Wholesale at leading accountancy firm, Wilkins Kennedy, said:
“The positivity of November’s figures surprise me and should be received with caution.
“Retailers, particularly those in fashion, cite November as one of the most difficult trading months – one of the key reasons being Black Friday because although the discounts prompt more sales, they are at the expense of any significant profit.
“Black Friday has evolved from a one-day flash sale to a longer period of time, which has driven the 13.2% growth in sales year-on-year.
“One of the underlying issues retail currently is although we look at wage inflations at 3.3% - which looks like a good thing – and inflation at 2.3%, overall consumer confidence still continues to wain with consumers uncomfortable about the financial impact on them from political uncertainty.
“We’ll get a better picture on the impact Black Friday has had when December’s figures are published, which is an absolutely critical month for most retailers.
“Failure to have a good December could send some retailers into free-fall; particularly those with too many physical stores as retail spend continues to shift online.
“To avoid trouble non-food retailers really need to have a laser focus on who their customers are and what they want–whether it’s to do with customer service, availability or innovation.
“The fact that more than 20% of all retail sales are now taking place online is a key area that retailers need to adapt to in the future.
“Retailers will be hoping that the final weekend before Christmas will be a bumper period for the high street to build solid foundations for 2019, particularly with interest rates likely to rise and place further pressure on people’s discretionary spend.”