Clear Digital Digest: here comes a very different Christmas

With just five weeks until what will be a very different Christmas this year, this Clear Digital Digest examines:

• The impact of the second lockdown on retail and online sales.
• The increasingly spread out nature of Black Friday – plus the potential implications of massively increased online sales on deliveries; Santa will be a busy boy this year.
• Christmas advertising is in full swing with ITV now forecasting an increase in revenue over this period so we take a look at this, plus a favourite campaign of the last week: Sony’s PlayStation 5.
• And finally: a novel approach to strategic planning. 

LOCKDOWN 2.0

Although not the cheeriest subject, this is the first Clear Digital Digest since we went into a second lockdown on 5th November.  

• The huge negative impact that this will have on the general retail sector has been widely reported, with Retail Economics forecasting that non-essential retailers will experience a decline in sales of £6.8bn. 
• With such stores closed for at least an initial four weeks, online sales will undoubtedly see another jump as happened during the first lockdown, with Retail Economics estimating an additional £2.9bn in online sales, albeit this would mitigate for less than half the decline from physical stores temporarily shuttered.
• Early indications from IMRG indicate that this shift online has indeed started, with sales in the first week of November growing by 61% year on year, the highest such growth since June and fourth largest this year.
• The ONS have this morning released their updated monthly online sales tracker, which shows that online sales accounted for 28.1% of all retail in October, up 9% from October last year, but also up 2% on last month’s 26.1%.  As the graph below shows, this is the first month on month increase since online sales peaked as a share of retail sales at 32.8% in May.  This is likely due to a combination of the slight restrictions from October’s tier system and general seasonality kicking in as online sales always peak from October to December.  With November’s lockdown it will be interesting to see what share of overall sales online takes this month – it would seem highly likely that as a minimum, May’s record share of 32.8% will be exceeded.

Source: ONS

BLACK FRIDAY: ONE WEEK TO GO

As well as the lockdown, online sales in November will be further boosted to some degree by Black Friday next week.  

• As we reported in the last Digital Digest, this imported US event starts earlier every year, with Amazon kicking off their “Early Black Friday Deals” on 26th October, a full month before the actual Black Friday, 27th November.  
• And it’s not just Amazon – IRMG have reported that of 320 retailers they monitor, 11.6% had already started promoting Black Friday deals by 11th November, compared to 3.6% on that day in 2019.
• If my email inbox this morning is anything to go by, then Black Friday deals have moved up another level again today, just one week out from the day itself.
• It has indeed been interesting to see how Black Friday has developed in the UK since being first selectively promoted a decade ago.  From its overall retail peak about five years ago, Black Friday had already started to become a largely exclusive online event (and obviously so in 2020), with key retailers such as Marks & Spencer and Next not taking part at all this year.  

DELIVERY: SANTA WILL BE INCREASINGLY BUSY THIS YEAR

One topic that we will likely hear more about in the coming weeks is the problems caused by these inflated online sales when it comes to actually delivering the orders.

• The peak Christmas period is always the most challenging time operationally for online retailers and delivery firms alike, all topped off by the extra emotive factor that most of these orders contain Christmas products.
• We reported last month that to cope with this extra demand, Royal Mail are recruiting a record number of temporary workers (33,000) to fulfil such orders.
• However, Citizens Advice this week released research which found that 47% of UK consumers have had issues with parcel deliveries since the first lockdown started in March.
• The challenge facing all retailers is articulated well by Gary Grant, the founder and executive chairman of The Entertainer toy chain, one retailer who did start their Black Friday sales early to help spread out sales.  As Grant declares “there’s no point the whole world thinking that on 27 November we can go online and buy everything we want, and it will miraculously turn up at our front door” having stated that if lockdown results in a 50% or 100% increase “we and the couriers could not cope”.  

CHRISTMAS ADVERTISING

Of course, to many it wouldn’t feel like Christmas without the high prestige TV led campaigns we are now accustomed to expect, which have really increased in profile over the last week with the launch of both the John Lewis ad plus a new series of ITV ratings winner “I’m A Celebrity Get Me Out Of Here”.

• Despite the general downturn in advertising this Christmas for obvious Covid related reasons, ITV are actually expecting revenues for the last 3 months of 2020 to beat those recorded last year.
• We highlighted last month that overall ad revenue for Q4 this year was forecast to decline by 10.5%/£724m – but within that TV was estimated to fall by only 2.7% year on year, compared to the likes of cinema (-66%) and outdoor (-20%).
• With regards to the TV ads themselves, this has undoubtedly been the most challenging year for both ad agencies and brand owners to strike the right tone creatively.  That said, I can’t help but feel somewhat underwhelmed by all the large retail campaigns I’ve seen so far, with no clear stand-outs.  That may be unfair as perhaps I’m just a little jaded by the increasing hysteria from certain quarters about the need to have a “normal Christmas” this year (spoiler alert: it won’t be).  In any case, this year’s effectiveness research will no doubt be intriguing for brand owners as it comes in.
• After a slightly negative note there, I’ll highlight an excellent (and cheeky) campaign by Sony to promote this week’s launch of their new PS5 console, where they have replaced the traditional London Underground roundels outside Oxford Circus tube station with the iconic four shapes that have featured on all PlayStation controllers.

• And I say this is cheeky because of the location chosen.  While Oxford Circus is obviously one of the best known and most used tube stations, it is surely no coincidence that console rivals Microsoft’s flagship UK store is located on the corner of one of Oxford Circus’ exits…

AND FINALLY…

As alluded to above, forecasting accurately for 2021 is going to pose more challenges than for any year in living memory.  So I liked this take on strategic planning from Tom Fishburne, the ever entertaining Marketoonist…