DEBATE: Has this Christmas season really been so bad for the retail sector?

Christmas In London
December has certainly been challenging (Source: Getty)

Has this Christmas season really been so bad for the retail sector?

Diane Wehrle, insights director at Springboard, says YES.

The comment by Gary Grant, founder of The Entertainer, that 25 per cent of toy retailers’ annual sales are achieved in December (and eight per cent the last week before Christmas) clearly emphasises the importance of this key trading period.

This year, however, consumers have pulled back spending, pre-empting the traditional Christmas shopping period by taking advantage of early discounting in November.

Springboard’s footfall data – representing the volume of shopper activity in retail destinations – reflects this. While footfall in November rose marginally by 0.2 per cent, it fell by 4.4 per cent in the first three weeks of December, with the largest drop in the most recent week.

With retailers offering substantial discounts online, it’s not surprising that over the same three weeks the volume of online transactions rose by 23.3 per cent. However, online spending accounts for less than 20 per cent of total retail spend, demonstrating that the sector still thrives or fails on the ability of its bricks and mortar stores to trade well pre-Christmas.

Read more: Retailers are facing a make or break week in the run-up to Christmas

Ken Daly, chief executive of JML, says NO.

Heavy snow, poor consumer confidence, inflationary pressures, Brexit… This Christmas, there seem to be all manner of problems.

But despite the doom and gloom, I see cause for great optimism. Challenging times sometimes breed exactly the type of change an industry needs. It was the economist Joseph Schumpeter who argued that change is driven by “perennial gales of creative destruction”.

In modern society, it is the innovators driving the winds of change. Disruptors are tearing through the retail sector and forcing us to think about how we can compete with online giants like Amazon in the future.

Yes, December has been challenging. But the sector is innovating constantly.

While retail sales dropped in November, year-on-year, at JML we expect our overall performance to match 2016’s record highs. Retail is redefining itself, and it’s inevitable that we will have difficult times along the way. For some, a Christmas of worse-than-expected sales might be the jump-start the sector needs.

Read more: Bah humbug: Spending fall points to miserly Christmas for retailers

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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