Two weeks to go, and as the temperature gauge plummets alarmingly, things are definitely hotting up at retail. By all accounts, since we got Bonfire Night out of the way, there has been a tangible upsurge in retail footfall and consumer spend. I went into town for a screen break yesday, and it was the busiest Thursday lunchtime I have seen for a very long while. I’ve seen reports on social media of retailers working 14-hour days (or even longer), but at least it sounds like the rewards are finally worth the effort.
Given the ongoing Royal Mail dispute and the unavoidable knock-on effect for courier services, I would imagine that most consumers will be far happier to go into store and physically get their hands on the products they want from now on, rather than risk online shopping and home delivery. Hopefully that means two further weeks of metaphorically ringing tills (note to headline writers: tills haven’t actually rung since I worked part-time in a shop while still at school in the late 1970s).
The UK is by no means alone in facing economic challenges this year; I am told that sales in Europe have been impacted too, while the tales of massive stock surpluses in the USA are certainly causing concern amongst suppliers. That stock has to go somewhere, and it won’t necessarily stay on the other side of the Atlantic. But that is a conversation for another day, once we get to the other side of Christmas: Q1 is undoubtedly going to be interesting, but first things first – the next two weeks is still very much a land of opportunity.
While shopping centres are getting busier, I do have one small bugbear: the proliferation of pop-up stalls selling toys and novelties of dubious repute. There is even stall in the shopping centre in Hemel Hempstead, where our office is based, which is openly displaying knock-off character merchandise (soft toys etc). It reminds me of the sort of merchandise you see at a fairground or in these really dodgy seaside shops – and yet there it is, bold as brass, a few steps away from a branch of The Entertainer. I genuinely can’t believe that the centre owners don’t conduct thorough due diligence on who is renting space from them …especially pop ups that are only there for a few weeks in peak season, taking business away from tenants who pay to be there all year round. Very naughty.
Happy New Year everyone (I assume it’s still ok to say that a week into the New Year?). I hope you all had a wonderful festive season and you’re feeling fully recharged and ready to face whatever fun and frolics 2023 has in store for us.
There have been a few negative stories in the press about post-Christmas retail footfall across the UK, but I want to focus purely on the toy retail channel. Allowing for the fact that my feedback is anecdotal rather than statistical, I see a very different picture. Based on what I have been hearing, the week before Christmas was exceptional for many toy stores – several posted on LinkedIn that they broke records day after day in that final week. Compared to where we were at the end of October, the contrast couldn’t have been greater.
Even the local Argos branch that I highlighted in the Blog before Christmas – when it was looking rather forlorn – had long queues on Christmas Eve. It’s well known that customers tend to turn to independent stores in December, once online delivery becomes too risky an option. It seems you can now put Argos in that same bracket – aided arguably by some aggressive promotional activity at the end of the season, but still, it appears as though Argos may have benefitted from a strong late surge (also confirmed to me by one of the Argos buying team).
Another retailer which enjoyed an excellent festive season was B&M – Q4 turnover rose by 6.4% and healthy non-grocery sales helped the retailer to significantly increase its margin. Perhaps it’s no surprise then that one major toy company told me this week that B&M is now its second largest account. It’s not exactly rocket science: retailers who can move fast and make swift decisions are important for a supplier’s P&L – a crucial reason why the likes of Smyths and B&M are regarded by many toy suppliers as key partners.
Rounding off a strong December, I gather the week after Christmas was decent as well (despite what you may have read in the papers about footfall). As a result, it appears that the stock situation here in the UK is rather better than some had predicted. The caveat is that the US stock holding situation allegedly didn’t improve to the same extent as the UK, and that stock will have to go somewhere – it won’t necessarily stay on the other side of the Atlantic. Nevertheless, it seems that many of our retailers may have come out far cleaner than they imagined, which can only be a good thing when evaluating what may happen over the coming months.
That said, it looks like Q1 may be a rocky time at Amazon. The staff are getting restless: warehouse workers in Coventry are set to stage Amazon’s first ever strike in the UK on January 25th, unhappy at the 50p an hour pay rise on offer. That, of course, only applies to the staff being retained – Amazon announced this week that it would be cutting a massive 18,000 jobs across the globe. So, have I got this right – Amazon went on a massive hiring spree over the last two years, paying many new employees well over the odds to entice them away from other companies….and now they’re getting rid of 18,000 of them? An interesting approach. As one very knowledgeable person pointed out on my LinkedIn feed, it looks like the anticipated cost-cutting exercise has begun – and as she says, “let’s see how this effects trading terms and products that are not profitable.” Very much a case of ‘watch this space’…