Don’t blame the weather for glacial December

Freezing conditions merely exaggerated long term retail trends.

December was officially the coldest winter on record for the UK, with heavy snow settling deep and even across the country for lengthy periods.

The weather will likely be blamed for glacial sales suffered by high street retailers but, in reality, it merely exaggerated trends that are leaving traditional shopkeepers struggling in the wake of today’s modern entrepreneurs and business giants.

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The BBC’s business editor, Robert Peston, identified one trend in his blog yesterday. He suggested that supermarkets benefitted this Christmas from non-food sales including festive decorations, clothes, books, toys, games and gadgets.

His sound argument runs that even nationwide retailers like Next and Marks & Spencer lost sales to Sainsbury’s, Morrisons, Asda and Tesco because when people ventured out into the snow to do their essential food shopping, they took the opportunity to grab all sorts of other items so they wouldn’t need to make another trip into Arctic conditions on the high street.

Businesses that have mastered multi-channel retail were the other big winners. Northampton jeweller Steffans (and saw its online sales boom in some weeks, particularly when the snow was thick on the ground, but the final few days before Christmas when people feared the postal service would delay deliveries of gifts, saw a late rush for the store business.

On a nationwide scale, The White Company and John Lewis reported identical trends. Catalogue and online sales were dramatically up on 2009, leading to positive multi-channel trading figures.

The weather also sharpened focus on what is always a precious commodity in retail sales – the level of trust and loyalty between customers and brands. Businesses like Amazon have overcome early difficulties to become one of the most trusted online retailers when it comes to on-time delivery. When the snow eroded trust in deliveries arriving in time, shoppers turned to the businesses that have a reputation for overcoming these challenges best.

A final trend that will take a little more forensic accounting to weed out will be the continuing rise of indoor shopping malls, although ground rent prices will rise in line with demand for precious space, potentially swelling profits for mall owners and squeezing them for retailers (a subject we will return to several times this year).

The trading figures will drip through over the coming months, but I have little doubt that the big losers of Christmas 2010 will have been shops on the high street that depend entirely on physical footfall. They can blame the weather all they like, but I strongly believe that all the trends are heading in the same direction come rain, shine or snow.




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