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Confidence for Christmas remains robust, as retailers prioritise marketing spend

Whether it’s Moz the Monster or Paddington Bear, the focus on Christmas adverts from UK retailers is greater than ever this year. The Barclays Christmas Confidence Survey reveals this trend is likely to continue, with a third (34%) of retailers indicating that they have increased their marketing spend, despite rising cost pressures, and 43% predicting that increased marketing across the industry will have a positive impact on Christmas trading.

In a reassuring sign, the results also show that confidence for the Christmas period is holding up, as compared with 2016, 71% are more confident or as confident about their overall Christmas trading prospects and 49% expect to achieve revenue growth.

Black Friday will continue to be a key pillar of most retailers’ Christmas strategies, with 73% participating, but it appears that individual approaches to the day are becoming more sophisticated. Indeed, survey results showed that one in two (50%) retailers will limit Black Friday deals to certain channels and more than a third (36%) will limit the amount of product on offer.

Looking at the wider Christmas period, 70% of retailers are planning discounts more carefully to maximise margins, with more discounting of select products over a longer period this year rather than heavy discounting on Black Friday being the preferred strategy for many.

Online and multichannel sales are expected to make a huge contribution, with half (49%) of sales this Christmas predicted to involve more than one channel, such as a product being viewed online and then purchased in store. An estimated 30% of sales will be completed online, around double the usual level in a standard month. Retailers appear to be adapting to the new challenges posed by these changing dynamics, with 41% investing more on their online capacity and infrastructure this year.

Ian Gilmartin, Head of Retail & Wholesale at Barclays Corporate Banking, said: “There are some very encouraging findings in this year’s Barclays Christmas Confidence Survey. It’s a difficult time with the combination of rising costs and uncertainty around Brexit contributing to a tricky overall operating environment, so the enduring confidence for the Christmas period is great to see and testament to the efforts being made by all involved in the retail sector.

“The truth is that most retailers don’t like Black Friday, with less than one in five believing that discounting generates increased sales. Consumers now expect heavy price cuts across the board in the middle of the retail industry’s most important season, so the evolving approach, with two thirds of retailers telling us they are planning discounts more carefully this year, reveals that retailers are focused on finding ways to make Black Friday work for them.

“The importance placed on marketing spend is really striking and along with ensuring the online and multichannel strategy is carefully planned, getting marketing campaigns right can really help attract customers to retail brands at this time of year.”

Looking at which gifts are expected to fly off the shelves this Christmas, Beauty and Health gifts are predicted to be very popular, with 64% of retailers expecting to see growth, followed by 60% anticipating more spending on homewares. The ongoing trend for activity led presents also looks likely to continue, with 46% expecting an increase in ‘Experience’ gifts.

The full report can be accessed at https://www.barclayscorporate.com/content/dam/corppublic/corporate/Documents/Industry-expertise/confidence-for-christmas-2017.pdf
About Barclays

Barclays is a transatlantic consumer and wholesale bank with global reach, offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in our two home markets of the UK and the US.

With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs approximately 85,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.home.barclays .