Festive returns are a mixed bag for retail

Retail results: who faces festive cheer and who faces serious concerns? investigates

Paul Simpson

Paul Simpson

The Christmas period, a time of year vital to all retail chains in the country, has come and gone once more. It has produced a mixed set of results, with some retail chains emerging as obvious winners, and others forced to announce humiliating defeats.

Among the collection of winners includes the high street names of Argos, Dixons, Primark and Thornton’s. Meanwhile, the most notable loser this Christmas has been Marks and Spencer, with the recent announcement that it has suffered its third Christmas of declining clothing sales.

Argos, who reported a 3.8 per cent increase in like-for-like sales, benefited from the demand for iPads and cookery items, as well as growth in mobile commerce and its internet sales, which now represent nearly half of total Argos sales. Next has also emerged as a big Christmas winner, raising its profit forecast due to sales being significantly better than expectations.

Marks and Spencer has the unwanted distinction of being the most obvious loser over the period though, suffering a tenth quarterly drop in clothes and homes sales. While the chain did well on food, its struggling fashion department produced a poor result overall. The poor performance of M&S comes after Debenhams boss Michael Sharp said that the high street was a “sea of red” in December, with fashion retailers forced to cut prices and run promotions.

Tesco, Morrison’s and Sainsbury’s are also high profile losers from the Christmas period, squeezed by a shift in shopping habits as customers desert to budget rivals, and away from the large out-of-town supermarkets. It is the second year in a row Tesco has seen festive takings fall. Sainsbury’s, the third largest supermarket, admitted it had seen the toughest festive period for 30 years. For the first time in at least that long, less food and drink was bought this Christmas than the year before, industry experts say, with many shoppers forced to tighten their belts.

This Christmas has also highlighted the rapidly expanding gap in success between the online market and the high street, with more and more shoppers buying online. While many supermarkets struggled this Christmas, the online grocery delivery firm Ocado experienced a massive 21 per cent growth in gross sales in the six weeks to early January. Stores which excel online, including John Lewis and Next, enjoyed a successful Christmas, while those struggling to keep up – such as Marks & Spencer and Morrison’s – suffered, further highlighting the increasing importance of online sales. A process which seems only set to continue.

From this wide variety of retail performances, general trends can be detected. The unstoppable expansion of online retail – at the cost of the high street – along with other changes to shopping habits, such as a move away from the big weekly shop are the most notable. It has also highlighted the importance of a chain understanding its customers and markets, with the rise of Next at the cost of Marks and Spencer a perfect example of this. The average shopper has become savvier, abandoning traditional loyalties in the search for a bargain.

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