Analysts say spending patterns have changed, with many people waiting longer for good deals
Millions of Britons will flock to high streets and shopping centres around the country on Boxing Day as they enjoy a holiday from austerity on the biggest shopping day of the year.
Despite some stores launching their sales in the days leading up to Christmas, the Boxing Day sales remain the main event in bargain hunters’ calendars as retailers slash the price of designer clothes and big ticket items such as TVs and sofas by as much as 50%.
Shopping centres are anticipating huge crowds with Bluewater in Kent, one of the largest, expecting 100,000 visitors on Boxing Day and 1 million over the rest of the week. “We’re expecting the next seven days to be very strong,” said Robert Goodman, general manager at Bluewater.
The lure of cut-price fashion is also expected to draw 700,000 shoppers to the West End in London, with queues expected outside department stores such as Selfridges and Liberty. The Knightsbridge store Harrods, which is launching its sale with a performance by the performers of Cirque du Soleil, is dangling big reductions on sought-after brands such as Chloé, Balmain and Diane von Furstenberg.
During December, Britons will part with almost £40bn – 50% more than in a typical month – as they stockpile food, drink and presents. But with many households struggling to cope with everyday food and fuel bills, the recession has altered the pattern of Christmas shopping, with savvy consumers looking to spread the cost over several months and holding back for in-store and online promotions.
For the second year running, Britons spent nearly 4% more between late October and mid-November as they took advantage of early-bird offers, according to analysis by Barclaycard of the spending habits of more than 11m UK cardholders. Then, in a break with the past, shoppers sat back and waited for the next wave of promotions, with spending down in the second half of the month, rather than building steadily towards a Christmas peak – as used to be the case.
“People have shown remarkable restraint during the tough economic climate and we’re now seeing this filter through to how they do their Christmas shopping,” said Barclaycard’s chief executive, Valerie Soranno Keating, who estimates that spending has declined by 1%-2% in the past two Christmas seasons after taking inflation into account. “Shoppers are now much more responsive to the deals on offer – both on the high street and online – and are holding back until they see the prices they want to pay.”
With the internet and increasingly services such as “click and collect” casting a bigger shadow over the high street, the Barclaycard data shows a 10% increase in the amount spent online this year, with goods bought on the internet now accounting for a fifth of the total spent on its cards.
After a five-year consumer recession, some retail experts fear that despite the opening day mobs, the sales will be a muted affair for both retailers and shoppers this year. After several difficult years retailers have less stock to clear having bought goods in smaller quantities, while in the weeks leading up to Christmas, the number of shoppers was smaller than in previous years, suggesting those worried about overspending had stayed away.
“In many ways, I fear for the sales this year as people genuinely have less money to spend and so there may well be less spending power for the sales,” said David McCorquodale, UK head of retail at KPMG. “However, at the end of what has been a tough year, there may well be a little bit of ‘comfort spending’ to give oneself a treat to finish the year … but only if the retailer discounts enough.”
In reality, shops do not close at Christmas any more, with many sales launched online as soon as stores shut on Christmas Eve. Retail experts at the industry group IMRG estimate that about £307m was spent online on Christmas Day with that figure expected to surge to £472.5m on Boxing Day.
Historically the Boxing Day sales belong to fashion, furniture and electrical goods stores. The latter two have found life very tough during the downturn because demand for big ticket items such as furniture and white goods is tied to people moving house.
“I have no doubt there will be pent-up demand for big ticket items,” said McCorquodale. “However, the lack of cash and consumer confidence – and also the lack of new house sales – may mean that these items will yet again be deferred for better times. Soft home furnishings may fare better as new cushions in a room can brighten it up even if the old sofa remains.”
Some specialist retailers, however, are optimistic as those Britons who have held on to their jobs opt to refurbish rather than move home. “As a consequence of tough economic circumstances, people are staying put and looking to invest in their homes,” said Charlie Harrison, marketing manager at Furniture Village, the UK’s biggest independent furniture chain.
Last year more than 400,000 people trekked to its stores on Boxing Day and it expects them to arrive in greater numbers this year thanks to price cuts of up to 50% on brands such as Ercol, Vi-Spring and Jensen. “We are anticipating an increase in transactions during this year’s winter sale, especially when instore and online sales are combined,” said Harrison, who said 80% of its shoppers would have checked out its website beforehand. “The online aspect of the sale is a vital part of the business.”
But with tablets and e-readers among the most sought-after items of 2012 analysts warn that shoppers are unlikely to find iPad Minis or Kindle Fires on the sale racks. “Apple doesn’t discount apart from on special occasions like Black Friday and sales of Kindles are tightly controlled and already heavily subsidised by Amazon,” said the Conlumino analyst Neil Saunders.
But despite the advent of 24-hour shopping ushered in by the internet, Saunders predicts there will still be people camped outside Next stores at 4am. “Some sales are still an event,” he says citing Next, John Lewis and Marks & Spencer. “Next doesn’t discount at any time so people still see it as something special. Also by Boxing Day people have had a few days off and are a bit bored; shopping has become something of a national pastime.”