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Christmas Shopping Habits - UK - February 2016

“It was a remarkably weak Christmas, damaged again by the impact of Black Friday promotions at the end of November. We think that retailers have to pull away as far as possible from discounting at the end of November and restore a degree of pricing integrity by promoting less overall. There was strong growth online, but it came from the store based retailers.”

Richard Perks, Director of Retail Research

This report looks at the foloowing areas:

  • Where next for end-of November discounting?
  • Cutting prices may be a short term fix, but it creates long term problems
  • Where next for online?
  • Prospects for 2016

Christmas trading turned out to be rather disappointing. There was a marked slowdown in retail sales growth in December, exacerbated by Black Friday and other end-of-November discounting pulling sales away from December gift buying. We argue that such discounting is bad news for the retail sector. It is a major factor in undermining people’s trust in retailers pricing and the majority of people think there is no point in paying full price for gifts because of the degree of promotional activity in the run-up to Christmas.

Online took an increased share of retail sales in 2015, but it is important to get it in perspective. The pure players saw their share decline in the final quarter, while the store based retailers powered ahead. We argue that for a store based retailer online provides a multi-channel service to customers, while only for the pure players is it the only route to market. And the pure players take just under half of online sales – just over 6% of all retail sales.

The outlook for 2016 is uncertain and the uncertainties increase towards the end of the year. We think that uncertainty is one of the reasons for the weakness in retail sales. But confidence is high, unemployment is falling and real incomes are growing, 2016 should be a reasonable year for retailers but it will not be easy.

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • Benign consumer background
            • Figure 1: Consumer confidence, 2009-15
          • Retail sales slowdown in the final quarter and a disappointing Christmas
            • Figure 2: UK retail sales value growth, 2015
          • Black Friday
            • Economic outlook
              • Online
                • Figure 3: Online share of all retail sales, monthly data, 2007-15
                • Figure 4: Online share of retail sales by sector, 2009-15
              • Christmas performance
                • Retail sector breakdown
                  • Figure 5: Major retail sectors, sales growth December and 4th quarter 2015
                • Leading retailers
                  • Figure 6: Leading retailers: Christmas performance, 2015
                • The consumer
                  • How many bought
                    • What did they buy?
                      • Figure 7: Gifts bought in-store/online, Christmas 2015
                    • In-store vs online
                      • Research
                        • Figure 8: Where people researched gift buying, Christmas 2015
                      • Which device?
                        • Figure 9: Proportion of device owners who use them to research gift buying, Christmas 2015
                      • Buying
                        • Figure 10: Where people bought their Christmas gifts, Christmas 2015
                      • Why buy online?
                        • Figure 11: Why Christmas gift buyers shopped online, December 2015
                      • And next Christmas?
                        • Figure 12: Shopping intentions profile for Christmas 2016, January 2016
                      • Provenance
                        • Personalisation
                          • Prices and promotions
                              • Figure 13: Attitudes to prices, provenance and personalisation, Christmas 2015
                            • What we think
                            • Issues and Insights

                              • Where next for end-of November discounting?
                                • The facts
                                  • The implications
                                    • Cutting prices may be a short term fix, but it creates long term problems
                                      • The facts
                                        • The implications
                                          • Where next for online?
                                            • The facts
                                              • The implications
                                                • Prospects for 2016
                                                  • The facts
                                                    • The implications
                                                    • The Market – What You Need to Know

                                                      • Retail sector slowed in Q4
                                                        • Inflation falls to zero
                                                          • Consumer confidence
                                                            • Black Friday
                                                              • Online
                                                                • Outlook
                                                                • Christmas 2015

                                                                  • The retail sector in 2015 – Slowing down
                                                                    • Figure 14: Retail sales growth and inflation, 2011-15
                                                                  • Pattern of sales
                                                                    • Figure 15: UK retail sales value growth, 2015
                                                                  • Inflation
                                                                    • Figure 16: UK retail sales volume growth, 2015
                                                                  • December as proportion of the year as a whole
                                                                    • Figure 17: December – Relative importance, 2005-15
                                                                  • Black Friday
                                                                    • What is it?
                                                                      • Online and Black Friday
                                                                        • Black Friday in practice
                                                                          • ‘Black Friday’ in 2015
                                                                            • Black Friday in future
                                                                              • Black Friday in numbers
                                                                                • Economic background
                                                                                    • Figure 18: Consumer confidence, 2009-15
                                                                                  • Employment/unemployment
                                                                                    • Figure 19: Employment/unemployment rates, 2010-15
                                                                                  • Real incomes
                                                                                    • Figure 20: Income growth and inflation, 2010-15
                                                                                  • Housing market
                                                                                    • Figure 21: Average UK house prices, 2003-15
                                                                                  • Savings
                                                                                    • Figure 22: Savings – Actual and planned, 2012-16
                                                                                    • Figure 23: UK savings ratio, 2003-15
                                                                                  • Outlook for 2016
                                                                                    • Online
                                                                                      • Online pattern changing
                                                                                        • Online sales pattern
                                                                                          • Figure 24: Online share of all retail sales, monthly data, 2007-15
                                                                                          • Figure 25: November online share relative to December, 2007-15
                                                                                        • Where next?
                                                                                          • Online sales by sector
                                                                                              • Figure 26: Online share of retail sales by sector, 2009-15
                                                                                            • Pure players vs store based retailers
                                                                                              • Figure 27: Store based retailers vs internet pure players – Share of online sales, 2009-15
                                                                                            • Why?
                                                                                              • Implications for the high street
                                                                                                • Getting online in perspective
                                                                                                  • Why aren’t online sales higher?
                                                                                                  • Leading Retailers – What You Need to Know

                                                                                                      • Trading up
                                                                                                        • Food retailers – Blip rather than reversing the trend
                                                                                                          • Clothing retailers, some weak leaders, but plenty of strong performances as well
                                                                                                            • Great figures from Dixons and a pleasant surprise from WH Smith
                                                                                                            • Christmas Trading Performance

                                                                                                                • Sector data
                                                                                                                  • Figure 28: Sector sales, December 2015
                                                                                                                  • Figure 29: Major retail sectors, sales growth December and 4th quarter 2015
                                                                                                                • Food retailers
                                                                                                                  • Benchmarks
                                                                                                                    • The companies
                                                                                                                        • Figure 30: Food retailers: Christmas performance, 2015
                                                                                                                      • Where next?
                                                                                                                        • Clothing and footwear retailers
                                                                                                                          • Benchmarks
                                                                                                                            • The companies
                                                                                                                                • Figure 31: Clothing retailers: UK Christmas performance, 2015
                                                                                                                              • Where next?
                                                                                                                                • Mixed goods retailers (including department stores)
                                                                                                                                  • Benchmarks
                                                                                                                                    • The companies
                                                                                                                                      • Figure 32: Department stores and other mixed goods retailers: UK Christmas performance, 2015
                                                                                                                                    • Where next?
                                                                                                                                      • Other sectors – Homewares, home shopping, miscellaneous
                                                                                                                                        • Benchmarks
                                                                                                                                          • Figure 33: Other stores fourth quarter performance, 2015
                                                                                                                                        • The companies
                                                                                                                                            • Figure 34: Home and other miscellaneous retailers: UK Christmas performance, 2015
                                                                                                                                          • Where next?
                                                                                                                                          • The Consumer – What You Need to Know

                                                                                                                                            • How many bought
                                                                                                                                              • What did they buy?
                                                                                                                                                • In-store vs online
                                                                                                                                                  • Research
                                                                                                                                                    • Which device?
                                                                                                                                                      • Why buy online?
                                                                                                                                                        • And next Christmas?
                                                                                                                                                          • Provenance and personalisation
                                                                                                                                                            • Prices and promotions
                                                                                                                                                            • Who Bought What?

                                                                                                                                                              • In-store vs online
                                                                                                                                                                • Figure 35: Gifts bought in-store/online, Christmas 2015
                                                                                                                                                              • Buyer profiles
                                                                                                                                                                • Figure 36: Profile of consumers by where gifts bought, Christmas 2015
                                                                                                                                                                • Figure 37: Profile of people who buy particular gifts, Christmas 2015
                                                                                                                                                              • Trends
                                                                                                                                                                  • Figure 38: Gifts bought, Christmas 2010-15
                                                                                                                                                              • How Many Types of Gifts Bought?

                                                                                                                                                                • All gift buying
                                                                                                                                                                  • Figure 39: Number of different types of goods bought as gifts, online or in-store, Christmas 2015
                                                                                                                                                                • In-store vs online
                                                                                                                                                                  • Figure 40: Number of different types of goods bought as gifts, online, in-store, Christmas 2015
                                                                                                                                                                • Men vs women
                                                                                                                                                                  • Figure 41: Number of different types of goods bought as gifts, online or in-store, men, women, Christmas 2015
                                                                                                                                                                  • Figure 42: Number of different types of goods bought as gifts, online, by gender, Christmas 2015
                                                                                                                                                              • The Customer Journey

                                                                                                                                                                    • Figure 43: Where people researched gift buying, Christmas 2015
                                                                                                                                                                    • Figure 44: Profile of gift buyers by where they did their research, Christmas 2015
                                                                                                                                                                    • Figure 45: Where researched, by where bought, Christmas 2015
                                                                                                                                                                • The Customer Journey – Research by Device

                                                                                                                                                                    • Figure 46: Online research by type of device used, Christmas 2015
                                                                                                                                                                    • Figure 47: Proportion of device owners who use them to research gift buying, Christmas 2015
                                                                                                                                                                    • Figure 48: Profile of device usage by research task, Christmas 2015
                                                                                                                                                                • The Customer Journey – Purchase

                                                                                                                                                                      • Figure 49: Where people bought their Christmas gifts, Christmas 2015
                                                                                                                                                                    • Buyers and spending
                                                                                                                                                                      • Customer profiles
                                                                                                                                                                        • Figure 50: Profile of shoppers by how much they bought online /in-store Christmas 2015
                                                                                                                                                                      • Where people buy and what they bought
                                                                                                                                                                        • Figure 51: What people bought by where they shopped, Christmas 2015
                                                                                                                                                                    • The Customer Journey – Purchase by Device

                                                                                                                                                                        • Figure 52: Online activity, (all devices), Christmas 2015
                                                                                                                                                                        • Figure 53: Online purchases by type of device used, Christmas 2015
                                                                                                                                                                        • Figure 54: Use of auction sites or Click and Collect by gifts bought, Christmas 2015
                                                                                                                                                                    • The Customer Journey – Why Shoppers Bought Online

                                                                                                                                                                      • What is the attraction of buying online?
                                                                                                                                                                          • Figure 55: Why Christmas gift buyers shopped online, December 2015
                                                                                                                                                                      • The Customer Journey – Next Christmas?

                                                                                                                                                                          • Figure 56: Shopping intentions for Christmas 2016, January 2016
                                                                                                                                                                          • Figure 57: Shopping intentions profile for Christmas 2016, January 2016
                                                                                                                                                                      • Provenance, Personalisation and Pricing

                                                                                                                                                                          • Pricing
                                                                                                                                                                            • Figure 58: Example of Amazon pricing, 2016
                                                                                                                                                                          • Personalisation
                                                                                                                                                                            • Ethical issues
                                                                                                                                                                              • Figure 59: Attitudes to prices, provenance and personalisation, Christmas 2015
                                                                                                                                                                            • Customer profiles by attitudes
                                                                                                                                                                              • Figure 60: Profile of those who agree with pricing/provenance statements, January 2016
                                                                                                                                                                              • Figure 61: Profile of those who disagree with pricing/provenance statements, January 2016
                                                                                                                                                                          • Impact of Black Friday

                                                                                                                                                                                • Figure 62: Black Friday: Number buying goods either as gifts or for themselves, November 2015
                                                                                                                                                                                • Figure 63: Profile of people who made purchases on Black Friday: November 2015
                                                                                                                                                                            • Attitudes towards Black Friday Promotions

                                                                                                                                                                                  • Figure 64: Attitudes to end-of-November promotions, January 2016
                                                                                                                                                                                • Attitudes of those who actually bought goods in end-of-November promotion
                                                                                                                                                                                    • Figure 65: Attitudes to Black Friday promotions by those who bought in them, January 2016
                                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                    • Financial definitions
                                                                                                                                                                                      • Abbreviations
                                                                                                                                                                                        • Consumer research methodology

                                                                                                                                                                                        Companies Covered

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                                                                                                                                                                                        Christmas Shopping Habits - UK - February 2016

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