Retail: Business trends in December

Christmas is the time of giving, and that entails shopping, lots and lots of shopping! The economy enjoys some serious growth in December and the retail sector lavishes attention on their shops and consumers. Deals are to be found and consumers are eager to spend their money, but competition is high and retailers are determined to prove they’ve earned profits from Santa and not a sack of coal.

There is an added pressure on retailers to perform. Business outgoings increase; the cost of extra stock and seasonal staff are both potential problems.

What else do you worry about?

Some problems are easily fixed. Business suppliers have different energy options; fixed gas prices eliminate one thing businesses worry about as they head into the New Year, but the pressure for sales increases throughout the Christmas period.

December is the one time of year where retailers can prophesise a strong increase in sales. The estimated weekly spend across all of retailing was an unbelievable £8.4 billion in December 2011. Those figures are more impressive when you consider sales totalled an estimated weekly spend of only £6.6 billion in May and £6.5 billion in June 2012. That’s a steep drop that even the prospect of summer couldn’t close. Of course, sales then increased to £7.3 billion in November and back to around £8.5 billion in December 2012, accounting for a massive 21% of annual retail sales; it’s the circle of retail life.

To be more precise, in December 2011 sales accounted for 10.95% of all sales throughout the year. In January 2012 this dropped to only 7.55%; customers have spent their money on Christmas presents and on the desirable sales that start on Boxing Day. If a retail company doesn’t have the increase in sales they desire in December, then January could look pretty bleak for some.

In 2008 the effects of a poor Christmas were clear to be seen; 20 major retailers went into administration, 40,000 jobs were lost, and shop voids rose to 10% by February 2009. Retailers can even close before Christmas if debt outweighs the projected earnings and cost of staying open. Simply, a good December can help eradicate the bad months beforehand and carry a company forward through the difficult, less profitable months; Christmas is critically important for retailers.

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