Retailers have panicked and cut their prices earlier, says analyst

As many retailers hoped for bumper orders on Cyber Monday, Dan Wagner, a retail analyst and founder of Powa Technologies, warned that many retailers risked making headlines for the wrong reasons in early 2015.

Mr Wagner highlighted the fact that a number of high-profile retail names went bust after Christmas last year. He warned of the dangers of relying on a discount day, or week, without implementing a longer term strategy.

Mr Wagner said: “Retailers are under more pressure than ever to deliver results, having watched major high street stalwarts like HMV, Jessops and Blockbusters go to the wall earlier this year after poor Christmas trading, they are determined not to join the ever growing number of bankruptcies on the high street.

“Retailers have lost their nerve and cut prices much earlier in the season than previous years, to claw back the 80 per cent of revenues they traditionally rely on getting in these final weeks of the year.

“Consumers have lost the appetite to pay more than they need to for goods, and empowered by their smartphones and tablets, they are checking prices as they shop.

“With online retailers promising same-day deliveries, the winners are those who can fulfil a shopper’s desire as soon as they see the item at the right price.”

A massive cash injection on a single day cannot hide a flawed retail strategy.

Consumer habits are changing, as mobile commerce helps consumers look for the best bargains and deals, and buy them on the spot.

According to Leeds-based Hitachi Personal Finance, shoppers will have spent a record £1.5bn, or more than £1m a minute yesterday, as they tried to avoid Christmas queues and stock shortages.

Cyber Monday has become the latest American “tradition” to be embraced by British shoppers. But with the seemingly unstoppable rise of Black Friday, could Cyber Monday become as dated and clunky as the ZX81 computer?

Black Friday – which is the Friday following Thanksgiving Day in the US – was accompanied by unruly scenes in Britain this year, which caused soul-searching about the rise of consumerism.

Cyber Monday – the first Monday of December – is the day when many people decide to shop around for Christmas presents online.

Lisa Harrison, head of retail finance at Hitachi Personal Finance, believes shoppers can still make big savings by hitting the web before they venture on to the high street.

She added: “A lot of this growth is coming from mobile channels, with sales over smartphones and tablets having grown by 138 per cent in 2013, compared with the previous year.”

The expansion of click and collect services has supported the growth of mobile commerce, with 25 per cent of multichannel retail sales now using this method. Multichannel retailers saw sales grow by 16 per cent last Christmas.

Retail analysts from Verdict expect Black Friday to become a permanent fixture in the UK retail calendar, as consumer demands continue to grow.

Verdict’s latest research also found that 25 per cent of UK shoppers were planning to buy their Christmas gifts earlier this year.

Kate Ormrod, a retail analyst at Verdict, said that many consumers had previously held out for bigger discounts in the run up to Christmas.

However, her research indicates that shoppers are more confident that discounts will come through earlier, which has resulted in spending being brought forward.

Overall, Verdict expects Christmas retail spending to be strong this year, but not spectacular. According to Verdict, an extra £2.3bn will be spent this Christmas when compared with 2013, reaching a total of £90.7bn.

This festive spending is expected to include £53.6bn on non-food items, and £37.1bn on food and groceries, as retailers benefit from an improving housing market and rising consumer confidence.

Verdict predicts that online retailing will make up £13bn of spending, with click and collect accounting for £1.6bn of online sales.

Small retailers can take heart from research carried out by TSB, which indicates that almost two-thirds (65 per cent) of shoppers hope to buy some of their Christmas shopping locally at independent high street shops and markets, rather than high street chains.

When quizzed by One Poll on behalf of TSB, more than half (54 per cent) of the 2,000 respondents said they will shop locally this Christmas because they want to support their local community.

A significant number of consumers are deciding to shop in their neighbourhood because it’s quicker and more convenient.

Andy Piggott, of TSB, said: “It is great to see people helping local businesses and communities to thrive by shopping locally this Christmas.”

It may seem that retail is heading towards a virtual world, but it’s worth remembering that we’re still social animals who need to feel connected to the world beyond our smartphone.