Brave New Year

Two instant lessons from Christmas retail:

1) The move to online is accelerating.

2) Consumers are squeezing brands and retailers viciously by demanding deals and discounts.

Next's figures (a reasonable barometer of the High St) are down, blaming both "extreme weather conditions and increased competitor discounting". But its the discounting - not the snow - we have to worry about, for that's where the pressure on margins lies. The snow may come and go, but in a cut throat retail environment, with so many companies in weak positions, the discounting is sure to go on.

The move to online is the obvious root cause of HMV's woes. This is the sharp end - how much future is there, really, in high street music and video selling? Will shutting 60 stores really save their business? Does a 20% drop in share price adequately reflect the possibility of the company collapsing?

Online shopping on Christmas day itself is predicted to have reached £153m in the UK - and been a more popular pastime than attending a Christmas church service. That's where we're at, people. (A very effective piece of PR for IMRG).

So first priorities for 2011:

1) Make sure your brands' online presence is right. Invest some time reviewing Search Engine performance - and doing something to improve it. And ensure your online retail distribution is sufficiently broad.

2) Think - hard - about how to compete in a perpetually discounted world. How can you offer discounts without undermining your brand? (because simply refusing to discount is probably suicidal). And how do you demonstrate and justify the added value that will make consumers buy the premium variant when low cost alternatives exist? Time to shine a bright light on brand architecture - so often the darkest recess of marketing strategy.