Are we losing the festive shopping spirit? I don’t think so. While the high street may be haemorrhaging customers, the value of Christmas shopping isn’t expected to be materially different from a year ago. What has happened is that the money is simply being redirected elsewhere, and in particular online, where spending is growing at a steady 10 per cent a year – Barclays reckons a third of all money now spent on credit cards is via the internet, while data from Nomura shows the UK has the highest propensity for online shopping in the world, at around 16 per cent of all retail trade, with the US – where bricks and mortar retailers have been toppling like dominos – only in third place at 10 per cent.
Thus a measure such as footfall no longer tells us very much about the state of the UK consumer, but it does tell us something about how we should be thinking about investing in a changing world. As Chris Dillow writes, often the promise of new technologies is overhyped, both in terms of how rapidly it is adopted and the rewards that can accrue to those that invest in it – this year you will have heard much about things such as AI and 3D printing, but their real-world impact is limited and yet to displace traditional methods. That is certainly not the case for retail, where the internet has brought about margin-depressing pricing transparency, and survival means reorganising around new technology-centred ways of doing business that align with changing customer behaviour.
Of course, not every retailer is proving able to move at the necessary pace, and it’s no surprise to find retailers such as Debenhams and Marks & Spencer – whose physical estates remain key to their format – top the list of the most shorted companies by hedge funds as we end the year. For private investors, the decision is less about whether to short-sell as to bail out entirely, but pulling the plug on an underperforming investment is never as easy as it sounds, even when disaster appears to be staring us in the face. As we discuss in this week’s cover feature, sharpening your selling skills could be an invaluable boost to returns in what could be a difficult year ahead.
