The post-Christmas buying and selling updates are actually coming thick and quick and there are just a few large themes that, it will possibly confidently be mentioned, are actually beginning to emerge.
The first of those is that the meals retailers have accomplished nicely.
The figures as we speak from Tesco and from Sainsbury’s on Wednesday each level to a resilient efficiency. Ken Murphy, the Tesco chief government, famous that 23 December was Tesco’s largest day for gross sales in its historical past.
The German-owned exhausting discounters, Aldi and Lidl, have additionally grown gross sales strongly over Christmas though it’s price noting that a lot of their development is coming from new retailer openings.
Unlike their extra established UK rivals, neither Aldi nor Lidl publish ‘like-for-like’ gross sales figures, which strip out the influence of latest retailer openings and refurbishments.
How rail strikes helped supermarkets
There are a few explanation why the supermarkets could have been doing nicely.
One is that, throughout the run-up to Christmas, the hospitality sector was hit severely by the rail strikes.
People who would have usually gone to pubs and eating places for occasions like their workplace Christmas social gathering have been deterred from travelling and it seems they spent the cash they saved within the grocery store.
The grocery store bosses must be sending ‘thanks’ letters to rail union leaders just like the RMT’s Mick Lynch and Aslef’s Mick Whelan for giving their gross sales such a lift.
That shouldn’t be, nevertheless, to downplay the self-help measures that each Sainsbury’s and Tesco have applied.
Both haven’t handed on the complete extent of the associated fee will increase they’ve been seeing in meals to clients however have taken the hit themselves as a way to stay aggressive.
Subtle language adjustments replicate worth matching fixation
Both stay fixated on matching Aldi on the costs of lots of their meals traces. That is even borne out within the delicate change in language that each have used about their rivals, too, as has been famous by retail Kremlinologists.
Simon Roberts, the Sainsbury’s chief government, on Wednesday referred to elevating his market share in opposition to “full line competitors” – in different phrases, Tesco, Morrisons and Asda, however not Aldi and Lidl, who rivals discuss with as “limited assortment” retailers as a result of they don’t inventory as many merchandise.
Mr Roberts additionally, in his investor presentation, highlighted how Sainsbury’s had been elevating its costs extra slowly than the opposite members of the standard ‘large 4’ and, particularly, how Lidl and Aldi seem to have been elevating their meals costs extra aggressively than rivals of late.
This was one thing that Ken Murphy, the Tesco chief government, additionally did as we speak.
His buying and selling assertion claimed Tesco was the “only full-line grocer” to extend its market share in opposition to pre-pandemic figures. This once more is a reference to what was known as the ‘large 4’.
Eyes on Morrisons
What sector watchers will likely be most eager to know is how Morrisons, particularly, fared over Christmas. It succumbed to a takeover bid simply over a yr in the past and it has been recommended that the degrees of debt it took on within the course of have prevented it from competing as aggressively on worth as as soon as it did.
There is an expectation that it has been dropping market share – though it’s price noting in passing that, based on the chart printed this week by Sainsbury’s, that Morrisons has been elevating costs on its largest traces way more slowly than most of its rivals, together with Aldi and Lidl.
One final level to make on meals is that Marks & Spencer seems to have loved a really stable Christmas.
Its UK meals gross sales have been up by 10.2% throughout the 13 weeks to New Year’s Eve and by a really creditable 6.3% on a like-for-like foundation.
M&S historically all the time sees its share of the meals market improve within the run-up to Christmas as customers commerce up.
That definitely seems to have occurred once more this yr: Stuart Machin, on the again of his first Christmas as chief government, could have been happy to notice as we speak that M&S had market management in turkeys for the third consecutive yr.
Strong Christmas for garments
The second large theme to focus on is that it has been a great Christmas for garments gross sales, as has been borne out by robust buying and selling updates from Next, JD Sports and as we speak from M&S, which identified that its market share in clothes and residential gross sales – essentially the most problematic a part of the enterprise for a few years – was greater than 10% throughout the interval, its highest stage since 2015.
There are a few explanation why clothes gross sales might have accomplished nicely.
One is that the climate in December was very chilly, which could have benefited gross sales of seasonal traces, corresponding to coats and jumpers.
How decrease inflation helped make garments good worth
The different is that clothes could have represented good worth this yr. As the British Retail Consortium figures printed final week highlighted, non-food inflation in November was operating at 4.8% and in December at 4.4%.
That shouldn’t be solely appreciably decrease than the headline fee of inflation, it’s also decrease than the common fee at which pay has been rising. Clothes could have represented good worth this yr as Christmas presents.
This uptick in clothes gross sales seems to have been strongest amongst bodily retailers.
More assist from strikes
Some individuals seem to have been deterred by the strikes afflicting Royal Mail from buying on-line, as borne out by the replace as we speak from Asos, the main online-only trend retailer, whose UK gross sales throughout the 4 weeks to New Year’s Eve have been down 8% on 2021.
The third over-riding theme is that, to date, Christmas for retailers has proved considerably higher than had been feared.
Why lots of people bought air-fryers for Christmas
AO World, the net electrical items retailer, lifted its full-year earnings forecast fairly dramatically earlier this week after having fun with a stable efficiency within the remaining three months of the yr.
It and its rival Marks Electrical have each accomplished nicely – which has raised hopes amongst buyers that Currys, the market chief, additionally loved a great Christmas.
Its shares are up by greater than 17% for the reason that begin of the yr.
What will likely be attention-grabbing to see, when Currys updates the market, is whether or not its gross sales combine continues to replicate the adjustments it and others have famous in latest months.
It doesn’t look to have been a very robust Christmas for tech – reflecting partly a lacklustre line-up of latest product releases from the trade’s large weapons – however gross sales of energy-saving merchandise have been doing nicely.
Lots of people, it appears, could have acquired an air-fryer for Christmas.
Why so robust? The principal motive seems to be that UK households are removed from having burned by way of the billions of kilos price of financial savings enforced on them throughout the pandemic when lockdowns prevented hundreds of thousands from going out or occurring vacation.
Paying extra for fewer items
To that, although, should be added a few caveats. One is that inflation could have flattered gross sales numbers. As the BRC identified this week, retail gross sales values in December have been up by almost 7% in 2021, however the quantity of products was “significantly down”.
In different phrases, individuals have been paying extra for fewer items.
The different caveat is to notice how cautious many of the buying and selling updates have been about commerce in coming months.
Lord Wolfson of Next mentioned final week that he expects each gross sales and income for the subsequent monetary yr to be down on the one simply ending, reflecting a sequence of pressures, together with ongoing inflation in important items and notably vitality, in addition to rising mortgage prices.
The Office for National Statistics identified this week that greater than 1.4 million UK households will this yr be coming off fixed-rate mortgages that, within the majority of circumstances, have been set at under 2%.
Their new mortgages will likely be at considerably greater rates of interest and that can cut back the disposable incomes of these households affected by a number of hundred kilos every month.
That is why, regardless of some robust Christmas showings in lots of circumstances, retailers stay exceptionally cautious.
Source: information.sky.com”