The Changing Face of Retail: A Challenging Christmas?

Ah, Christmas. While we all love the festive time of year, the last few have not been plain sailing for retailers. First came COVID, and now comes the cost-of-living crisis which will impact consumers and businesses alike.

Retailers are facing unprecedented challenges this festive period. Just like consumers, they are having to deal with hefty increases in utility bills, they face uncertainty trying to second-guess customer demand and are also managing ongoing staffing (and sickness) challenges, import delays and stock shortages. Simply Business suggests that one-third of small businesses make 20% of their revenue between Black Friday and Christmas, so overcoming these challenges to ensure the festive period is a success is vital.⁽¹⁾

Let’s look at some of the challenges retailers may face for Christmas 2022.

Tackling OPEX

One area where everyone is feeling the squeeze is the cost of power. For smaller retailers and many restaurants and pubs, this leads to a conundrum: Is it worth staying open for late-night shopping, adding Christmas lights, or even being open every day? While customers have got used to shops and stores being open at their convenience, there is a cost attached to doing so – particularly if you’re a small business facing high overheads as the nights draw in and the temperature drops.

This is where careful analysis of your past retail trends can make a meaningful impact. If you’re open on Mondays, or offer late-night shopping some days of the week, carefully crunching the data to evaluate the value of remaining open during those quieter times is crucial. Cutting back on the overheads that come with running your business may be necessary. Clear customer communication of any change in hours is essential and offering services like home delivery or click-and-collect can help mitigate any inconvenience.

There are many grants available to small businesses, so check your eligibility to see if you qualify for any additional support.⁽²⁾ The UK government also recently announced the Energy Bill Relief Scheme, to help businesses cope with the energy price increases.⁽³⁾

This may also be the year to ditch the Christmas lights and instead choose more traditional festive decorations that don’t require electricity to power them.

Plan your Christmas carefully. Only spend what you can afford and focus on the things that will give you a solid return on investment.

Plan your products and inventory

Use surveys and other communication tools to find out what your customers have planned for the festive period. Use the information you gather to plan your inventory, to ensure that your customers can buy what they need and you’re not going to be left with excess stock come January. It may mean giving people fewer choices, but you can lessen the blow by ensuring you’re stocking the things that make their Christmas special. Your customers will be feeling the pinch too, so those little stocking fillers aren’t going to sell as well as they maybe have in previous years.

A recent report by Retail Week is predicting a ‘polarised Christmas.’⁽⁴⁾ Sectors like gardening and DIY are predicted to see a decline, but items such as beauty, homewares, fashion – especially sustainable fashion and toys and games are all expected to perform well.

Promote like crazy

Customers will be looking for a bargain where they can find one. Get busy with a lot of marketing in advance of Black Friday to get those tills ringing. Send out emails to let people know what offers they can expect and make the discounts generous! While discounting is going to impact your profit margin, selling 10 of something at 20% off, versus one item at full price makes the numbers stack up. Use social media as a sales channel to boost your retail beyond your existing customer base. Also, don’t forget that the World Cup is taking place through November and December, so make sure you have some themed promotions lined up while we all get footy fever.

Offer different payment options

Finally, splitting the cost of Christmas is going to be crucial for many this year. Payment instalment options such as Klarna and PayPal Credit will all see increased demand so that people can cover the cost of Christmas through regular monthly payments.

And finally, the UK is on course to have a white Christmas this year, with bookies recently dramatically cutting the odds⁽⁵⁾, so make sure you’re encouraging your customers to do their shopping early, just in case!

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The Changing Face of Retail: A Challenging Christmas?

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