The Deloitte Christmas Retail Survey - My View

Deloitte has launched its 14th Annual survey into retailing in the run up to the traditionally most important time of year for most stores.

The opening paragraph shocked me, not for any worrying data, but for realisation that's been a pretty crap year for retailers all round. They talk about the dire weather during the year, with a freezing Easter, a wet summer (for 90 years apparently) and not Indian summer. Now retailers have to face the prospect of serious belt-tightening because of the lack of cash for many and the prospects of redundancy for many more. Now we've got Woolies and MFI going into receivership and DSGi said they've recorded their first half year loss for a couple of decades.

But is it really that bad? The other day I said it possibly wasn't. In the survey 24% said they'd be cutting back their Christmas spending, whilst 57% actually said they wouldn't be changing their Christmas shopping habits and 19% said they'd increase their spending. And 16-24 year olds are said not to be affected by the current economic crises as much as other groups.

But what do you notice about the three companies mentioned above? My view is that they're not exactly the most innovative, in touch, cutting edge companies. Businesses that are dynamic and nimble aren't being affected to that agree (am I wrong?) The report stated that two thirds of retailers have not felt the need to change their business, either in terms of stock levels, pricing or how they interact with their customers (how worrying is that?)

The head of UK Retail for Deloitte, Tarlok Teji, concludes what many have been saying" we're in an 'in-terainment' economy. Businesses that allow people to entertain their friends at home instead of spending a couple of hundred quid on a night out at the weekend are thriving. This certainly includes homebrew kits, pizza delivery, and satellite TV.

Another interesting finding is that brand loyality will be waning. Don't expect your membership list to buy from you just because they did last year. We're in the age of "value tarts". Retailers have to offer true value - not just low prices. High end Christmas food spend will suffer - to the advantage of discount food retailers. But will affiliates in this area notice a difference? The down turn in luxury brand purchases is expected to decline by 2%.

Another interesting piece of information is that 'convenience' remains the most important factor for Christmas shoppers. Retailers really need to be thinking, if they haven't yet, about free deliveries and the ability to set specific delivery dates. If you're £1 more expensive but the consumer knows they can get everything delivered on a set day then you'll be a winner this Christmas.

My worry is that this 'convenience' factor will join forces with the desire to do their food shopping. So I'll be increasing exposure for the supermarkets on my sites (cleverly). Why do you I say that? Well supermarkets have been hammered this year because of the weather and they NEED the gift sales more than ever. And consumers are willing to oblige. In 2007 5 in 10 shoppers said they'd by their Christmas presents in supermarkets. This year its 6 in 1 - something the affiliate marketing industry to really get their collective head around.

But the most pertinent information for affiliates is that "total online Christmas gift and food expenditure this year is expected to increase to an estimated £4.71 billion, up 10% on 2007". In more detail: this is not only due to more shoppers spending online, but people spending a greater proportion of their total expenditure online - great news!

It gets even better for people in my niches. The average expenditure of experienced online shoppers (mainly young affluent males) is expected to be £773 compared to the average population of £655.

But the problem remains, has Christmas spending peaked already? Anecdotal evidence, and my own experience, is that the couple of weeks before Christmas is when it gets BUSY online. The report (figure 11) shows that 60% of people (that are driven by discounts and promotions) will start their shopping in November or before. Whilst 26% will do it in early December and 7% will do it in the second half of the month. The vast majority of Christmas shoppers will finish early too.

Another interesting fact is that there was a 20% increase to price comparison sites from July 2007 to July 2008 and a 130% increase in traffic to specialist voucher code sites.

Also take a look at page 18 for what men and women say they really want for Christmas - interesting stuff. Women still want designer handbags (40% of them apparently!! try Handbags and Gladrags?) although they apparently say they mainly want vouchers, fragrances and clothjes; under 12's still want computer games; the popular "gadget" search terms are still dominated by Nintendo, Apple PS3 and Xbox.

So if affiliates need to optimise their sites for sales and traffic, take a look through the report. Retailers with stock purchased and paid for should look at how you fulfil orders and where you can add value.

And for me? I've bought my presents already (except for my brother's family in NZ) and getting ready to wrap. Now I can spend time on my sites.

update: 247 Electrical have been placed into administration.