Christmas shopping begins with bumper buildup to Cyber Monday

The Christmas shopping season got off to a bumper start over the weekend, with record takings recorded as a result of last week's American-style "Black Friday" promotions, and a further £450m expected to go through the online tills today, which has been dubbed "Mega Monday".

John Lewis said its online sales on Friday smashed its previous record for a single day's internet trading by more than 100%, with thousands of orders coming in the middle of the night from customers who preferred shopping to sleeping.

The figures suggest that Black Friday, a US retailing gimmick where stores offer big discounts to kickstart the shopping season, could now become a permanent fixture on the UK shopping calendar.

Today, the buying frenzy is expected to move up another notch. The first Monday of December, which in recent years has become known as Cyber Monday, or Mega Monday, is the busiest day of the year for online sales, as shoppers order early to ensure pre-Christmas delivery.

Nearly half a billion pounds is expected to be spent online on Monday – the equivalent of £312,500 every minute – as more than 7m transactions take place. It is likely to be the busiest day ever for online shopping in the UK, with more than 113m visits to virtual stores as shoppers use their last pay cheque before the big day.

Online retailers expect to have raked in more than £1bn between Saturday and Monday night.

Jeremy Nicholds, Visa Europe's director of commercial development, said: "UK consumers' love affair with online shopping will reach its peak on Mega Monday, when we predict that we will process 7.7m transactions – a 16% rise on last year."

Total Christmas sales are expected to be a staggering £72.2bn – or £351 per person – an increase of more than 2% on last year, according to the Centre for Retail Research. Of that, one third will be spent online.

Catalogue and internet retailer Argos is braced for its busiest online shopping day of the year, and is expecting 3m hits on its website. It is prepared to dispatch 2m packages a day in the runup to Christmas from its 11 regional distribution centres.

Last week's Black Friday promotions – established in the US on the day after Thanksgiving, but new to the UK – have led to an exceptionally strong start to Christmas spending. John Lewis, the only retailer to give a detailed trading update, said that last week's Black Friday event conclusively signalled the start of Christmas trading. It recorded sales of £147m for the whole week, up 18.4% on last year and up 31.4% week-on-week. Online trade was up 35.7% on the year and ended 19.4% higher than its previous biggest week.

Mark Lewis, online director of John Lewis, said: "Any doubt over whether UK consumers are interested in Black Friday has been cast aside as record sales were notched up online and via mobile devices for John Lewis. Looking ahead to this week, we predict that today [Sunday] will see customers go online to continue their Christmas shopping."

Sales from mobile phones rose significantly compared with last year. On Friday mobile orders climbed to more than three times the record for a single day, with huge demand from consumers shopping in the early hours. Between midnight and 8am, sales from mobile devices were up more than fourfold on a normal Friday in November, and breakfast-time buyers – placing orders between 7am and 8am – were up 1,340% .

Many were buying iPads, televisions and PS4s, with one selling every four seconds in the early hours of Friday morning.

In unprecedented scenes, shoppers desperate for bargains caused chaos in Asda stores on Friday as the supermarket – owned by US group Walmart – brought the Black Friday experience to Britain. Customers scrambled to snatch cut-price electrical goods after queueing for several hours outside Asda stores around the country.

Asda said it had sold out of virtually everything: "Black Friday exceeded our expectations and was hugely successful. We sold over 11,000 tablets and 12,000 TVs in the first hour."

But traditional shops and retail centres will not necessarily lose out to the boom in mobile shopping. The rise in the popularity of click-and-collect will see footfall to high streets, retail parks and shopping centres boosted by double digits on Mega Monday, retail expert Springboard has predicted. It expects to see week-on-week footfall increase by 15% across all retail locations on 2 December, and by 2.6% year on year.

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Treasury keen to boost John Lewis-style ownership

Consultation on tax break for worker shares follows evidence businesses owned by staff are up to 19% more productive

The Treasury is hoping to encourage a wave of John Lewis-style businesses by launching a consultation on £50m worth of tax breaks for employee-owned companies.

The government wants to make it easier for entrepreneurs to hand ownership of their companies to employees amid evidence that businesses owned and influenced by workers, such as the department store group, have proved more resilient during the economic downturn.

Chief secretary to the Treasury Danny Alexander said: "The employee ownership sector has huge potential and the government wants to support it as much as possible. Employee ownership is of significant benefit to the wider economy, through increased growth and business success and this business model will also add greater diversity to our economy."

Employee-owned businesses outperformed the UK economy in 2012 as they benefited from a measured approach that led to more investment, greater productivity and lower staff turnover. The Cass Business School concluded in 2010 that employee-owned businesses are up to 19% more productive than traditionally structured companies.

The John Lewis Partnership (JLP) is owned via thousands of employees through a trust.Chancellor George Osborne announced in this year's budget that the government would provide £50m in 2014, and the same amount in 2015, to support employee ownership. Alexander will say on Thursday that the government will provide tax relief that is "supportive and effective".

The Treasury will consult on offering capital gains tax relief when a controlling stake in a business is sold to employees collectively, rather than to individual shareholders.

A second tax break would allow employee-owned companies to pay staff a tax- and national insurance-free bonus each year. At present, payments such as the annual John Lewis staff bonus are taxed at up to 40%, the same level as the rest of their pay, whereas dividend payments to shareholders in publicly listed companies are taxed at 20% and are not subject to National Insurance. Alongside the Treasury consultation, the department for business, innovation and skills is launching national employee ownership day.

The recent success of The John Lewis Partnership (JLP), which is owned via thousands of employees through a special trust, has helped drive new interest in employee ownership with a 10% increase in the amount of companies converting last year.

Sir Charlie Mayfield, chairman of JLP and president of the Employee Ownership Association (EOA) which represents over 150 businesses controlled by their staff, welcomed the government support. He said: "Employee ownership is not just a nice thing to do but a better way of doing business." Mayfield added that the business model could help solve "some of the biggest issues in society and some of the biggest economic problems."

An independent review of employee ownership carried out last year found that growth in the sector was hindered by poor awareness of the potential for employee ownership and the complexity involved in handing a business over to staff.

At the moment, employee-owned businesses make up just 3% of the UK's GDP but the EOA believes this could be built up to 10%.

The EOA says a tax incentive might help combat concerns about potentially lower valuations for sellers and the complexity of converting to employee ownership, which can take several years to complete.

"The government's fantastic and welcome support for employee ownership has yet to be reflected in incentives for companies to move from family ownership to employee ownership. It seems logical to make a mild bit of tax reform to achieve that," said Iain Hasdell, chief executive of the EOA.

Mike Warburton, tax director at accountancy firm Grant Thornton, warned that the government would have to set a minimum level of staff ownership in order to avoid abuse of employee benefit trusts, which are often used as vehicles for staff ownership. In the past, these trusts have been used as a means to avoid tax by unscrupulous business bosses.

However, he said: "This is a very interesting idea and shows the government is thinking about ways to stimulate the economy."

Mayfield said that employee ownership would allow the UK to develop more medium-sized businesses by adding an alternative option to being acquired by private equity firms or taking the stock market flotation route.

Article Source : http://www.guardian.co.uk

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