Christmas failed to sparkle as strongly on the high street as it did on-line, according to a report from retail analyst Verdict. Its E-retail 2005 research shows that Internet retailers have enjoyed record sales, jumping by 44.5 per cent year-on-year in the last quarter to £2.6bn.
Meanwhile, the lacklustre high street sales have prompted a number of major retailers to issue profit warnings, barely one week into the New Year. Woolworths, Next, House of Fraser and Marks & Spencer are all stuck in the doldrums after a disappointing festive season, and the already troubled J Sainsbury is expected to release trading figures this week.
Analysts are also advising market-watchers to keep an eye on Boots the Chemists and WH Smith. Just like M&S and Sainsbury’s, these established companies are attempting to breathe new life into their businesses.
Weak sales during the crucial run-up to Christmas can have a negative effect for the marketing services industry. Advertising agencies in particular can bear the brunt of a bloodletting by retailers that are seeking to point the finger of blame and herald a new start.
Rumours have it that a number of ad agencies are sniffing around the Boots contract, currently held by Mother and its loose consortium of design groups, which includes Saturday, Household and Poke.
For design consultancies, the situation is generally less precipitous and poor retail sales may even benefit the sector. ‘All the old guard retailers are trying out new formats,’ says Lippincott Mercer senior partner Rune Gustafson. ‘These companies are by no means on their knees, but they have not been flexible enough. Design in particular can help bring relevance through the environment.’
Gustafson believes that it is important to understand the current consumer mood. They are cautious, he claims, but still willing to splash out on ‘must have’ items. ‘Retailing is a sensory experience and you’ve got to play to those senses. New ideas need to be put in front of consumers more frequently – as often as every week,’ he adds. Bristol’s Taxi Studio works with a range of retail clients, including Clarks and Somerfield, and has recently been appointed to the Superdrug packaging design roster (DW 6 January). Creative director Spencer Buck says that despite the weak customer spend recently, there does not seem to be a slowing of design work if you look ahead.
‘Hopefully, the smarter companies will start spending money in the right areas to raise their game, [although] others may panic and slash budgets,’ he says.
The Nest strategy and communications director Freddie Baveystock concurs. ‘The more courageous response [to poor sales] is to make the experience more inspiring and interesting to the customer. This is a more realistic approach than returning to an old and tested format, because it acknowledges changes in the market,’ he says.
Meanwhile, the pounds continue to drift on-line. Verdict found that a site’s ease of navigation was the fourth most important factor in visitors returning to make multiple purchases. Of the 4000 shoppers questioned, 38 per cent cited navigation as important, up from 30 per cent a year earlier. As on-line retailing’s popularity continues to rise, effective Web design will become as imperative as keeping the format fresh on the street.