New Year's Sale 2020
With the onset of the new decade, it was a given that the average consumer would want to go all out. The holiday shopping season is no longer restricted between October and December anymore, but has extended to New Year’s Day and beyond. The concept of January sales makes the customer have a second shot at everything they wanted to get for Christmas but did not follow through with.
Rough patch for UK
In the UK, stores were slashing prices to the tune of 70% and beyond. Amazon, Curry's, Boots and John Lewis had attractive deals on electronic devices, home appliances, dietary supplements, furniture, cosmetics, and homewares. For the fashion-forward, brands like Topshop and H&M were providing discounts up to 60-70%. In spite of all the attractive deals, sales flatlined for the third month in a row. According to the Distributive Trades Survey by the Confederation of British Industry (CBI), orders placed on suppliers plummeted by 17% as compared to 10% in December. The trend will probably continue to follow a decreasing slope with -19% projected for February. Sales for the time of year saw a decrease of 31% and 7% in December and January, respectively, and are expected to remain below par in February. The silver lining in this bleak scenario is that online sales saw a rise in growth from 18% to 46%, and February is expected to maintain a growth of 50%.
Factors responsible for the stagnation include Brexit as well as minimised growth in the disposable income of households. Rising costs in business rates, rents and wages, along with declining footfall in brick-and-mortar stores, have led to the worst year for retail in 25 years. Debenhams closed a significant number of stores, Mothercare UK went into administration and John Lewis cut its staff bonus for 2018-19 to 3% of annual pay.
No slowdown in the US
The situation wasn’t quite so dismal across the Atlantic. The United States showed a 4.1% rise in holiday sales in 2019, with total sales touching 730.2 billion dollars. Stores like Target, Urban Outfitters and Walmart were offering discounts up to 70% at their clearance sales. Macy's offered great deals for cosmetics at their Glam Beauty event while Wayfair wooed customers with 75% off on home decor and furnishings. Non-store retail sales comprising e-commerce, catalogue sales and miscellaneous avenues such as kiosks and vending machines, showed a 14.6% rise, with a 23% representation in the total holiday sales. Year-over-year retail sales were up by 5.8%.
There is a clear disparity in the economic situations of the US and the UK. Factoring in inflation, focusing on e-commerce and changing government policies may affect the current state of things. It is yet to be seen whether both the nations live up to their 2020 retail predictions.
The solid finish to 2019 bodes well for the 2020 retail season in the US. While the economy may move at a slightly slower pace, the foundations remain strong with consistent job growth, higher disposable incomes and stable consumer spending habits. As a result, recession fears have reduced as the 2019 momentum is expected to continue into 2020.
Online retail is gradually taking over a significant portion of the market share. However, the lines are getting blurred as omnichannel retailers often use their brick-and-mortar stores as the pick-up point for online orders. Store openings by retailers like Amazon Go, Coco, TJX and Ulta Beauty, are far outpacing store closures in the USA.
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