Battle for Christmas Shoppers Intensifies in Retail Industry

Posted on 14 November, 2012 by Kirsten Kennedy

Christmas, and the weeks preceding it, is always the busiest time of year for both chain and independent retailers. With consumers formulating lists of gifts and cards to send to friends and family, businesses frantically organising Secret Santa and office parties and supermarkets brimming with customers buying food and drink for the eagerly anticipated Christmas Dinner, it is only to be expected that revenues will be boosted significantly for the majority of stores in the UK.

However, this Christmas is something of an anomaly, as it is the first in recent years that the UK has not had the shadow of the double dip recession hanging over its head. While this may prove to have a good effect on sales, the four years of economic uncertainty have had a strong impact on consumers – in that budget shopping and saving cash have been the order of the day for so long that splashing out on luxuries may not be to everyone’s taste. In fact, there is even speculation that the longest recession since war time has changed the spending habits of UK shoppers irrevocably, thus making the current retail market entirely unpredictable.

Perhaps this is the reason, then, that retailers nationwide are frantically battling with each other in order to draw larger crowds than their rivals this year.

John Lewis, for example, has launched a campaign promising to match the low prices of electrical goods offered by other chains for the festive period. In other years, this would simply be a run of the mill price match initiative, but this year another factor has been thrown into the mix – the demise of electrical chain Comet. The collapsed firm is expected to attempt to recoup some of the funds paid out to suppliers by dropping prices heavily in its stores, which will also go some way towards paying off the chain’s debts. For John Lewis, this will mean slashing the prices of electrical goods in order to remain competitive in the electronic goods market.

Managing director of John Lewis, Andy Street, says; “The price promise is critical. Obviously there has been a price war, but we have stuck to our guns.

“What has been proven is that we can take that pain and others can’t.”

The administration of the Comet chain has already proven to be profitable for John Lewis. Sales of electrical goods in the popular chain rose by 21 per cent in the past quarter alone, with a record 29 per cent boost in sales during the week of Comet’s collapse.

Comet’s administrators have announced that the chain’s stores will be accepting payments using gift vouchers from now on, after heavy speculation that vouchers issued were no longer valid dissuaded shoppers from visiting stores. However, consumers in possession of these vouchers should probably act fast, as store closures are expected to begin early next week.

Of course, John Lewis is by no means the only department store attempting to boost its customer base this Christmas, as Debenhams will be cutting prices on certain items by up to 50 per cent in the run up to the big day. Usually, the sales begin on Boxing Day and run into January, but the rule book seems to have been rewritten for Christmas 2012.

Competition between different chains has now reached the point that retail industry experts are now predicting that this Christmas will be the most heavily discounted in several years. Even during the recession, the majority of stores attempted to boost profits by keeping prices stable – this tactic was something of a necessity, given the falling revenues of most groups throughout the rest of the year.

Supermarkets are also getting in on the action with the fourth largest chain in the UK,  Morrisons, last week announcing its intentions to implement promotions during the run up to Christmas. In the meantime, the petrol price war rages on, with chains such as Asda, Tesco and Sainsbury’s attempting to draw in consumers by making a loss on fuel prices – clearly hoping that the drop in fuel revenue will be made up by customers in the supermarkets themselves.

All in all, this Christmas should be one to remember for those who love a good bargain. However, for smaller chains that cannot compete with the prices offered by more successful multinational groups, this festive season may not prove to be the merriest.

Will you be participating in a workplace Secret Santa this year, and if so, are the low prices on offer in some of the UK’s most popular stores taking a load off your mind in terms of your personal finances? Will you be visiting John Lewis in the hopes of picking up electronic goods at bargain prices this year, or would you prefer to spend money at a smaller independent store which attracts less business?

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