Retail Opinion our expert John Ryan looks ahead to the new year

from Toys n Playthings December 2022

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Season of goodwill?

As Christmas nears, what should we expect when the reckoning takes place in January? Retail expert John Ryan looks ahead to December – and beyond

Wandering past Hamleys last week there was the usual seemingly inexhaustible pair of female elves giving it large to pop tunes you know but can’t quite remember who wrote or sings them. One of the windows that provided a backdrop for the green and redclad dancers had the outline of a reindeer, filled with an army of miniature reindeer. All was red and snowy and, just inside the door, was a graphic featuring a Hansel & Gretel-style house.

It would actually be quite hard to miss the point that the festive season is upon us or, perhaps rather more cogently, we are now well into the ‘golden quarter’, that period upon which most retailers rely to provide a fillip to their takings.

Toy shops, of course, need shoppers to do their thing at this time of year more than any other sector in order that the joy of Christmas (spending money) can be felt by toy recipients and retailers alike. The question on everybody’s mind, however, is whether enough has been done to put people in the mood for digging deep?

It’s always said that whether a turkey becomes a large chicken, a Christmas tree becomes artificial instead of real, or Cava takes the place of Champagne, gifts for children are the one thing that parents and grandparents will not skimp on. Yet, with heating now looking unfeasibly expensive and inflation roaring ahead, will this be a Cool Yule and will margins be preserved more or less intact?

Each month, for the past few, analysts have expressed surprise at how relatively robust retail sales have been in the face of what look like unsurmountable economic difficulties, and we keep being told that the cost of living crisis will take its toll in due course. Well, maybe, but in spite of the many stories being told of how we are all battening down the hatches, the tills seem to continue to ring out. The nightmare scenario for retailers, of course, is that crunch time for consumers coincides with the Christmas rush, which then turns into a damp squib. This could happen, but it is worth considering what the effect of not spending (as much) during the pandemic has been. We may have felt that the world was closing in on us as Covid took hold, and online shopping may have proved one way in which we dealt with things, but most commentators seem agreed that while we worried we saved more – by not eating out, travelling and suchlike. The net effect is that many of us actually have more in the way of savings than was the case when the first cases of the lurgy were being reported. And for retailers the good news is that Christmas really is a time when other considerations go out of the window and spending goes ahead anyway.

A supplementary question, however, is what happens after that? Again, social and print media tend to be full of reports of ‘the most depressing day of the year’ (the third Monday in January, apparently), when the chickens come home to roost. Shoppers go into retrenchment mode and whether wallets emerge at some juncture in March, just in time for Easter, looks very much a moot point. It’s the opinion of your humble correspondent that this is the moment when we really will be seeing things heading south(ish)…but only for a while.

Back to Christmas, however. The signs are in place that when the numbers are crunched, immediately into the New Year, things will turn out to be rather better than anticipated (beware of making predictions that can demonstrably be shown to be incorrect). Head down to your local large shopping centre and things already look busy – in good quality space. The point was made by retail developer and mall owner British Land recently that the best shopping centres are actually doing rather well - and there’s the rub.

When times are a little harder than we might be used to we become more discerning. A lot of retailers (and toy shops are among them) have disappeared over the past couple of years and those that remain are in place largely because they were efficient merchants. There will, of course, still be some fat, but the retail sector as a whole knows what it’s doing, mostly because it’s already weathered a storm.

‘Fewer, but better’ has been the high street mantra of late and where things don’t seem to be going as well as hoped, the answer is to close poor performers. H&M is a case in point. One in five H&M UK stores have closed in the past few years, meaning that being a retail store passenger is not acceptable as far as large retail estates are concerned.

All of which means that we will see a reasonably Merry Christmas and that this will be followed by a modest downtown – the recession will be upon us. This will not necessarily be as calamitous as all the pundits are saying/ praying that the downturn will not have great depth. Coming on the back of poor trading thanks to Covid this is, to put it mildly, unfortunate, but not terminal.

Be of tempered good cheer therefore. All will not be lost and the overwhelming majority will live to fight another Christmas. It’s no good being gloomy. Just put your head down and battle through the next six weeks and then deal with things as they are. It could be better but it could certainly be a whole lot worse!