While 2020 has not been as hideous as expected, we are not holding our breaths that 2021 is going to be a stunner for retail. Let's explain.
For some in the retail sector, 2020 was simply "not as bad as we expected." No ones magic 8 ball could easily foresee what the heck was going to happen with the impact of the global pandemic. And we certainly are not out of the woods yet.
The back end of the year feels like we are riding an incredible high. Black Friday this year was simply phenomenal. While in the past Labour weekend had traditionally marked the official start of the festive season for retailers, Black Friday has continued to grow exponentially and last year surpassed Boxing Day retail sales. It has been adopted widely throughout the retail sector and this year saw "20% off" as the unofficial baseline for promotional offers, with the "day" extended sometimes up to a week (or two).
And while the Northern Hemisphere changed their tactics and moved to a month or fortnight of Black Friday offers released online - not encouraging customers to storm the stores - New Zealand was a totally different situation. And our sales tell the tale.
The above table from RetailNZ highlights the strong overall results reflected through consumer confidence and the fact that money has been retained in NZ as Kiwis stay home, not travelling overseas, and taking advantage of low interest rates which encourage spending.
Singles Day, Black Friday and Cyber Monday have contributed to the strong November result, and while retailers hope that consumer spend remains strong, managing supply chain and freight delays, become a significant risk to performance.
Juanita chats with Hilary and Jeremy on Seven Sharp regarding retail and Christmas in 2020.
Our biggest concern as we move into 2021 is the prospect of recessionary impacts on retail. We are picking it around March/April for reality to bite.
Typically in winter months, New Zealand benefits from an injection of around $300m in tourism dollars. However the traditional injection we see in December alone is $1.2b and our domestic spend clearly would fill the gap left from our international travellers. This specifically will have flow on impacts into retail and hospitality as we continue to right size our business based on demand.
While 2021 may feel like a year we can't wait to get our teeth into, at RetailX we feel it's going to be one where the reality of COVID actually bites the economy through jobs losses and a decline in retail sales. That means retailers are going to need to cut the cloth even further and continue to get creative around maintaining sustainable retail businesses.
We think that retailers may need to look at new and different ways to collaborate. Where there are a commonality in shopper attitudes and behaviours - or as you probably have referred within the business, shopper personas; retailers should be thinking about joining with like-minded peers to find new and collaborative ways to capture the heart, minds and wallets of their community.
An example in the US is where 15-20 mission driven brands banded together and developed a joint sales event, "I stand with small." Effectively, their effort was to drive traffic — and hopefully sales — to each other's businesses.
And it was really successful. For the brands, it did what it was supposed to do: give them a lift at a much-needed time. For consumers, it introduced them to new brands that held similar values to the ones they already bought from. After the initial sale's success, the companies started talking about working together again and a website launched to showcase the brands in July.
This concept is more than just some peers getting together. They have a deeper shared connection related to social, environmental and purpose missions. Effectively they have similar DNA. Hoping to continue to drive those gains, the group of brands launched a holiday catalogue and digital campaign for the holiday season. The catalogue gave each company two pages to talk about their mission and display their products, and was shipped to 250,000 of the best customers across all brands (about 10,000 to 15,000 of each brand's best customers).
This is an example of the type of thinking, while not exceptionally disruptive, that retailers are going to have to explore in 2021 and beyond.
The one incredible thing that COVID has bought to the fore is a renaissance around the concept of local, and community and helping each other. Something I for one will be toasting to at midnight come the end of 2020.