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Hitwise Intelligence - Robin Goad - UK

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Pre-Christmas sales searches: let the game of Retail Chicken commence!

October 09, 2009

We’ve written a lot about the growth of voucher searches and the emergence of the ‘maximising consumer’ recently. Indeed, UK Internet searches for discount vouchers continue to increase: as of last week, searches for our portfolio of voucher-related searches were up 40% year-on-year. However, it is important not to underestimate the impact of a good old fashioned sale, particularly for high street retailers. As we’ve already highlighted a couple of times this year, seasonal sales and discount days within the department store and fashion sectors have already had big impacts on both web traffic and search behaviour.

The main difference between discount vouchers and sales is that, while the former perform consistently well during the year, the latter are very much seasonal affairs. Given that the months between the end of summer and Christmas are so important for retailers, they generally try to avoid offering discounts in order to maximise profits. Most of the shopping that takes place during the ‘golden quarter’ is unavoidable (those presents need to be there under the tree on Christmas Day), meaning there is little need to stoke demand further by offering unnecessary discounts. Of course, that is the ‘usual’ logic; during times of recession, conventional thinking sometimes requires a certain amount of modification.

The chart below illustrates the breadth of UK Internet searches for the keyword ‘sales’ (i.e. the number of different searches that contained the term) over the last 18 months. As you can see, last year sales searches dropped off dramatically at the end of the summer and didn’t properly recover until the week before Christmas. This year they have followed a broadly similar pattern so far, but the post-summer decline has been less marked, while the late September spike has also been bigger. Overall, the level of sales searches is currently higher than it was this time last year.

Although the economy may be on the verge of recovery, there is no doubt that consumer confidence will remain low this Christmas. It will be interesting to see how retailers – both online and offline – react to this, and how it affects the traditional pre-Christmas game of chicken between bargain-hungry consumers and profit-maximising retailers. Does the increase in sales related searches mean that consumers have smelt blood and are ready to punish retailers that aren’t willing to feed their discount hungry appetites?

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