UK Retail’s ‘Golden Quarter’

(Please note that some of the content of this post has previously been published in my comments over the past three days to both Retail Assist and the Nottingham Post)

Whatever happens over the coming three months, this ‘Golden Quarter’ for UK retail is going to be completely different, and for all sorts of reasons. The new restrictions for much of England introduced from today (Wednesday 14 October) don’t directly impact the ability of all retailers to continue trade (as most have been doing since ‘non-essential’ retailers were allowed to reopen after the national lockdown ended in June)

However, the way shoppers might now behave and think, will certainly cause further damage to the UK’s retail sector, which has been so hard hit since COVID-19 began. As has been well documented, UK retail was struggling even before this year and so the enforced closure of ‘non-essential’ retailers for three months earlier this year caused major economic problems, and in some cases retailers have just not reopened.

The October-December trading period is known as retail’s ‘Golden Quarter’ as traditionally it has provided large sales increases across most categories in the run up to Christmas. It also includes the lucrative Halloween and Black Friday events. However, this year, much of this annual boost to retail is just not anticipated by most retailers for a variety of reasons, and this week’s ‘Tier 3 and Tier 2’ classification for many parts of England certainly won’t help.

The new restrictions in many parts of the UK once again advise people to work from home wherever possible and to avoid using public transport. As we saw in April and May, this is likely to lead to another dramatic drop in footfall in the centres of our cities and towns and so customers in their shops, cafes, coffee shops and restaurants.

Existing social distancing rules, and the latest Tier 3 and Tier 2 ban on meeting other households indoors, is bound to restrict the way people celebrate a range of family events or celebrations (as well as Halloween) and so impact shoppers gift purchasing levels.

Consumer confidence is likely to fall even further, not least because of the uncertainty these latest restrictions cause, but also the increased insecurity about their jobs and future finances felt by so many as the furlough support schemes is wound down. This will translate directly into the way people shop and most importantly their spending levels.

The latest restrictions amplify a sense that things may once again be getting worse rather than better is also likely to result in many shoppers delaying non-essential purchases. This will have a hugely damaging impact on the retail sector, particularly if shoppers start to wonder whether the current, or even wider restrictions might still be in place over Christmas.

The huge shift to online shopping seen during lockdown this Spring (for obvious healthcare and convenience reasons) will clearly dominate the Christmas shopping experience. This move to a more ‘online Christmas’ started a few years ago, together with the impact of the ‘Black Friday’ online shopping festival in reshaping the pre-Christmas shopping calendar.

We’ll probably have to get through the much-delayed Amazon ‘Prime Day’ (taking place this week) and then the huge ‘Black Friday’ four-day weekend at the end of November before the extent of this year’s Christmas online gift spending levels become clearer.

I also expect far less extravagant Christmas TV commercials, whether from John Lewis, M&S, Sainsburys, Tesco, Morrisons or Asda. They are all likely to be much simpler and pivot to addressing COVID-19 issues (for example thanking NHS and other frontline key workers) together with a much greater focus on the home, the family and keeping safe than usual.

There will also be a significant reduction in many ‘peripheral’ Christmas gift sectors. Thousands of office Christmas parties and other Christmas work and wider family celebrations, or even young children’s annual visits to see Father Christmas, won’t be able to take place this year. This will mean a huge adverse impact on all those involved, and Christmas presents purchased. For example, after very strong ‘cult’ growth over the past decade, sales of novelty Christmas jumpers are likely to completely dive this year!

However, there may well be a surge in sending Christmas cards. Although over the past decade sales have declined as people met or exchanged greetings in other ways, I think in these socially distanced times many may revert to a more traditional (and COVID-friendly) method of ‘seasons greetings’ communication, which also reflects the increased time now spent at home by many people. Digital card companies have already seen huge increases in demand, and I think this will inevitably accelerate between now and Christmas.

Finally, and as previously mentioned, this 2020 ‘Golden Quarter’ for UK retail is going to be completely different and so it will be fascinating to see how it plays out.