Current trading and retail trust
Black Friday and Cyber Monday have gone. Now retailers are asking consumers to come back and buy for Christmas. The body language of stores out there says everything. With 66% now on sale – a totally unprecedented number – the reality is beginning to emerge. After a 12 month diet of more or less permanent price promotions shoppers are tired, and confused. They no longer know whether any given price, even if it has already been cut, will be cut further This is bound to impact a) buying behaviour and b) trust in the retailer.
This will have a material impact on performance. First, Black Friday turned out to be more online than anticipated. However, substantially higher store costs have still been incurred. And so too will higher costs than budgeted in order to fulfil increased online sales. Cost of sales online are higher than in store, so there will be a direct impact from this alone. Then there are returns. I suspect returns will be even higher than usual online, so whatever early indications of Black Friday sales might be, they will net out considerably lower.
As I said in my opening paragraph, we can already see some of the implications of this in the incredibly high discounts out there. The vast majority of mark downs are current season stock, and there is lots of it. I have been warning for some time about next year’s tightening industry economics and trading will be materially more difficult. Many retailers will be entering 2016 with too much stock and too little cash, and that’s before the new economic screw starts to tighten.
** How do you see 2016? How confident are you in your forecasts? Did you get 2015 right? Get an informed, objective second opinion – admin@richardtalksretail.co.uk