There are signs emerging that for retailers this, the fifth austerity Christmas since the recession started in 2008, has offered little in the way of encouragement for the sector.
The British Retail Consortium said the total value of goods sold was up just 1.5% year on year whilst, when calculated on a like-for-like basis excluding new floor space, sales were just 0.3% higher. Factor in inflation and the BRC’s figures suggest that the sector sold less in real terms.
Retailers have posted mixed reports. John Lewis and House of Fraser recorded growth; Tesco reported strong results, Sainsbury’s were also up while Morrison’s – which doesn’t operate online – the area of strongest sales – reported a disappointing performance.
But what those figures will not show is how the retailers’ performance has trickled down to their supplier base and, therefore, what kind of Christmas the FMCG manufacturing sector has enjoyed or endured.
By virtue of the importance that is placed on it, Christmas is a demanding time of year for both retailers and manufacturers alike. Logistically it can be a challenge as there are finite resources to distribute product to stores as urgently as it may be needed. But there is equal demand to see product turned over, shelves emptied and replenished. With retailers ironically becoming more and more adept at having product in store, shoppers have begun feeling more comfortable to leave it later and later in the run-up to Christmas to complete their purchases for the festive period. One upshot of that is that pricing strategies tend to be disregarded according to perceived day by day performance with products promoted or discounted too early and too heavily. All of this impacts most severely on the manufacturer.
This is a process that continues into the New Year. In January, under pressure retail category managers recognise they have a matter of weeks to hit the targets set for them and, in turn, they place pressure on the supplier to help them through further discounting.
It’s a situation that could be, if not avoided completely, minimised and planned for in a more informed manner. Getting the balance right needs greater clarity in decision making which in turn needs more accurate data and insight to feed into that process.
Suppliers have to take the onus for this; national account and category managers receive too much data, have too little time to absorb it and gain no real insight from it. Using a programme like our NAM Epos+ system, which suppliers can use to extract quite detailed sales data from the top five multiples, suppliers can win over category managers by providing insights in the last quarter and Christmas, which can be fed into the decision making process now and also used as part of planning for this year’s festive season. This enables decisions to be made jointly, on the basis of fact and in a planned rather knee-jerk way, at a time when otherwise thinking is coloured by the drive to simply do anything to hit numbers. After all, at the height of the season, when it’s often difficult to see the wood from the Christmas trees, a little clarity can be a wonderful thing.