Comment: Christmas message in the shops

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The Independent Online
We become serious shoppers at Christmas. If you look at a graph of retail sales through each year, every December there is a sharp upward spike, as sales surge from their normal pattern. But people do not just buy more. They buy differently. Instead of buying things because they need them, people buy things because they want to buy them. As a result, shopping habits at Christmas give a feel for bigger socio-economic changes, changes in the way we live now.

That makes this Christmas very interesting indeed. This is to some extent because it will give retailers a feeling for whether the long plateau in spending, which has now lasted for five years, is finally over; but it is more because the way people spend their money will give a signal of customer habits and tastes in the future. The 'how much are people buying?' question is almost less significant than 'what are they buying?' and 'where are they buying it?'

In fact it is not difficult to guess the answer to 'how much?' Retail sales were down a little last month, but taking the autumn as a whole, they have been running a little up on last year and, though hardly anyone will believe it, have been at an all-time record.

LESS CROWDED

It does not feel like a particularly busy Christmas, partly because it is only just a record, but more because a lot of additional retail space has been opened in the past five years. The shops are less crowded because there is more floor space available per shopper. But unless something really dreadful happens, this Christmas will be a record - just.

Guessing the 'what?' question is much harder. There are things like the list of top 10 toys that Hamleys is selling, published in this paper yesterday. That list says something about willingness to spend in a recession for it has Sega and Nintendo video games at one and two, both priced at pounds 129.99, while felt-tipped pens that change colour, at a mere pounds 3.99, were down at number nine.

But that is toys. Most of the money spent at Christmas is not spent on toys, but on the normal range of consumer goods. Unfortunately there is little information, even anecdotal, about what is happening there. Perhaps the most interesting survey of new 'hot' consumer products comes from the US, where each year the magazine Fortune lists 10 products of the year. This is not a scientific exercise at all, but it is a useful one in identifying shifts in consumer tastes.

Out of the 10, four are electronic goodies. There is an Apple notebook computer, the Kodak photo CD (which enables people to view their snaps on a TV set), the new generation of mini-discs and digital compact cassettes from Sony and Philips, and the AT&T video phone. These are unsurprising, for they are all part of the continuing rapid progress of electronic technology.

Two of the others are motor industry products: a new Goodyear tyre and the LH series of mid-sized cars from Chrysler. In European terms they are nothing special: merely an example of the US catching up with standards of good European design.

The other four are interesting because in different ways they do say something new about what consumers want. One is a speciality ice-cream, where the novelty is that it has chocolate chip dough in it: that is, bits of uncooked chocolate biscuit. The product itself would not have an obvious European appeal, though doubtless the makers will have a shot at selling it here. But there is obviously a considerable market for novelty food products here. The explosive growth in the range and variety of prepared foods in supermarkets has been one of the greatest social changes in Britain over the past 15 years. It is hard to remember that there was once a time before the M&S chicken kiev, or even before the invasion of the kiwi fruit yoghurt.

Another Fortune winner is hip-hop fashion, a style developed out of rap, which involves wearing clothes that are several sizes too large. Moral: fashion is still a moneymaker, but the forms that fashion will take are as fickle as ever.

HEALTH HELP

The final two products are the most interesting of all. One is a health device, the nicotine patch, which smokers who want to become ex-smokers wear to give them a continuous fix of nicotine. Success rates are up to 40 per cent. Moral here: people really are taking their health more seriously and will buy things that help them.

The other was Ross Perot. Ross Perot? Yes, as a product that was seriously and expensively marketed to the US population, the Perot run for presidency must rank as a selling success. Very few new products can achieve a 19 per cent market share, particularly when fighting two long- established brands. The moral - that consumers are willing to buy new and untried political products if they are unhappy with their previous purchases - should serve as a warning to the established brands here.

That last is hardly a Christmas purchase, but the other three can be: food, fashion and health products all happen to be sectors that have performed quite strongly on the London stock market in recent months. From the narrow perspective of financial markets those types of product are indeed potential winners for the future. Once Christmas and the January sales are over, the business community would be wise to settle down and try to see whether there is a general message emerging from consumers along these lines.

Finally the 'where?'. In the US there have been three main trends in retailing: one is for boutiques (including chains of boutiques) to replace general stores; a second is for out-of- town shopping malls to grow at the expense of main streets; a third is for discount stores and factory outlets to grow at the expense of everything else.

We have seen the first two here, and will see more of them. One of the practical effects of the IRA bombing campaign will be to promote shopping malls, which are easier to police than high streets. The bombing is to UK shopping habits what city centre street crime is to US practice. We have not, however, seen the explosive growth of discount stores, selling branded goods at far lower prices than conventional retailers can manage.

It has not happened here partly because the mainline retailers have traditionally run on somewhat lower margins than their counterparts in the US. It is partly because in both clothing and food manufacturers' brands are less strong, while retailers' own brands are much stronger. But it is also because Britons are less aggressive shoppers. At any rate there have not been the discount department stores, warehouse clubs and factory outlets that dominate much of US retailing.

That would be something to look for very closely in the months ahead. The squeeze on incomes ought to make buyers hunt harder for bargains. If so, maybe the sales will give a better feeling for the underlying strength of the retail market than the Christmas rush. Meanwhile, there appear to be plenty of Sega and Nintendo sets on discount, while if anyone wants to buy a brand new Hoover, all they have to do is look in Exchange & Mart. But that is another story.

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