Retail Insight Network talks to Whitaker about how retailers are preparing themselves online and in the high street this coming Christmas, from stockpiling products to preparing themselves for serial returners in the New Year.
Rosie Lintott: In what ways are retailers bracing themselves for this coming Christmas?
Ben Whitaker: I think we’ve hit a perfect storm of potential negative influences coming together at the moment. We’ll start with the situation with Brexit which in itself has caused retailers to look at how they’re getting their industry together. They’re getting ready for peak trading, so this time is crucial for them so they’ve got to make sure that they’ve got enough stock. A lot of retailers have been stockpiling so that has an impact on their cash flow so there’s a lot of stock sitting in a lot of warehouses.
The retailers are hoping consumers are going to come out and buy, but then you’ve got the issues around consumer confidence, which are actually probably directly impacted by Brexit at the moment, there’s so much uncertainty just generally. That’s likely to impact on consumer confidence in the run-up to Christmas so that may well have a knock-on effect for retailers in terms of they’re not going to take the money they thought, but actually they invested a lot of money in stock that is going to sit in warehouses and they’ve got to find a home for it at some stage.
With the issue of sustainability, retail is an inherently wasteful trade and there are people starting to look at the types of stuff that they buy and do they actually need to buy brand new stuff, so you combine those two elements together, you get quite a lot of negative influences coming up in a crucial time of year.
RL: Have you seen anything new that retailers are coming out with for this Christmas?
BW: One of the things I’ve never come across before and that I’ve seen, online retailers have is there are more and more buyers that are prepared to buy a perfect condition item in damaged packaging and that’s quite unusual to know. In online retail you’d expect to buy pristine goods in the same way you would in a shop, but linking back to the sustainability aspect, a proportion of the market base actually recognise that they’re buying an item online where the condition is perfect but the packaging is damaged.
Where previously that packaging may be replaced they’re actually saying ‘do you know what, you can send me it in a damaged box’ because the alternative is actually replacing that box with a brand new one and you’ve got two pieces of packaging associated with one item. So more and more people are saying ‘you know what I don’t mind buying it in a damaged box as long as I know the item is in perfect condition’ that is something I’ve never seen before until this year.
RL: Is waste something retailers are focusing on this year?
BW: I think retailers will have no choice; primarily their customers are going to start to demand that as a retailer they are openly trying to be as sustainable as possible. People will start to vote with their feet in terms of deciding who they buy from if the business hasn’t positioned itself as a sustainable one.
The other element to it is, I think, legislation is going to come forward at an increasing pace; it’s actually going to make sure or compel retailers to not look at the easiest solution with this problem, which sometimes actually is to incinerate it. So in blocking that route to incinerating or landfilling it, then you’ve got to go and find somewhere else to go with that item.
RL: Do you think consumers wait for the better deals closer to Christmas?
BW: I think that’s absolutely spot on, and the other thing that has accelerated it is the Boxing Day sales that start before Christmas. Again, there are more and more people getting wise to the fact that, as I said previously, there are very good deals around the festive season. There’s a good chance that people are prepared to wait and go and do the Boxing Day sales because it’s part of the family tradition. I think people are very aware that there are bargains to be had and they’re getting more and more savvy about where to look and the timing of when they want to buy stuff. They know that by hanging around for a couple of days there may be deals to be had that may not be have been there, say, the week before Christmas versus the week after.
RL: Do retailers see more returns during the festive period than any other time in the year?
BW: I would say yes. From our perspective, we see the significant uptick in the amount of inventory that comes through our marketplaces, and this is on a global basis; it’s not just in Europe, it’s the same in the US. In almost every single public category that we work in, this is coming into our busiest time of the year and really the surplus and the returned stock peaks around January, February and March so there is an awful lot of stuff that’s been bought that starts getting returned. It actually starts prior to Christmas – again it’s Black Friday phenomena – it will be interesting to see whether our busy period stays constant. I suspect it will because I think that the retailers will just start discounting anyway and it encourages people to bu. It’s almost like night follows day; if people buy online and in stores, to a certain extent that they’re going to buy things and they’re going to return things.
RL: What is your overall prediction for this Christmas?
BW: My expectation is it’s going to be a hard Christmas. I think there may be a confidence bounce if the general election produces a positive outcome in terms of no hung parliament or a government with a majority. It means that the uncertainty that’s hanging in the air is going to get cleared one way or another that may actually unharness the shackles of confidence. I think conversely if there’s no clear majority everybody will think “Not the same again!” That could really be a knocker for Christmas.