January 10, 2013 / 2:15 PM / 5 years ago

Retailers fight for scraps over tough Christmas

LONDON (Reuters) - Department stores chain John Lewis and deep discounter Aldi emerged as winners on Thursday after British retailers fought it out for every pound in a tough Christmas.

Elsewhere Tesco showed signs of life, John Lewis and Next proved as reliable as ever, but Marks & Spencer was left looking embarrassed when its poor results were leaked a day early.

In a fiercely competitive festive season marked by heavy discounts, few British retailers emerged triumphant, with even some strong performers posting growth well below inflation.

Those that did well had a breadth of products, a range of customers and multiple channels - or appealingly cheap prices.

Department store chains John Lewis and Debenhams both lured record numbers of customers to their shops and websites.

Next, which has a longstanding policy of not discounting before Boxing Day, also raised its yearly profit guidance after solid trading.

“The star of the retail world has undoubtedly been John Lewis, their performance has been outstanding,” said Neil Saunders, managing director at retail consultancy Conlumino.

“We’ve had an online and multi-channel Christmas, where those retailers who have offered great multi-channel solutions ... have done very well. And those who haven’t have lost out.”

Camera specialist Jessops called in administrators after customers deserted its 192 stores to seek cheaper deals online, the latest casualty in the hard-pressed sector.

Some retailers were also hampered by the fact that many Britons left it to the last weekend to do their shopping, in the hope major chains would buckle under the pressure and launch sales before Christmas.

One trader selling “I Love London” T-shirts on Oxford Street, central London’s main shopping destination, said people were spending less. “There are no people, the whole year has been quiet”.


Among grocers, budget group Aldi stood out with growth of 30 percent, in contrast to previous years when shoppers saw the holiday season as an excuse to upgrade to a more expensive outlet.

The decision instead to stick with a shop that sells a bottle of sparkling wine for 3 pounds and a meal for 89 pence was described by analysts as a reflection of the pressures on Britons from a lack of job security and a pay squeeze.

A Tesco store sign is seen in Kensington, west London October 3, 2012. REUTERS/Paul Hackett

“Let’s just say I tried to be more careful ... I think people are still spending, but they’re being more choosy,” said Veronica Pinney, 71, on Oxford Street.

For those who could afford to splash out, the upmarket John Lewis-owned Waitrose proved popular, outshining the performance of the so-called big four of Tesco, Wal-Mart’s Asda, Sainsbury and Wm Morrison.

According to market research by Kantar Worldpanel, Sainsbury was the only big four grocer to win market share as cash-strapped shoppers honed in on its cheaper own-brand products, online offerings and local stores. Sales of its own-brand Prosecco, sold for as little as 6 pounds, leapt 15 percent.

Market-leader Tesco, a year on from a dismal Christmas that prompted its first profit warning in two decades, posted its strongest growth in three years as it showed the benefits of a 1 billion pound turnaround plan.

A man pushes his shopping trolley into a Tesco store in Hammersmith, west London October 3, 2012. REUTERS/Paul Hackett

“In the UK I think we were back on form,” said Chief Executive Philip Clarke. “(But) whilst our seasonal performance is encouraging, there is a lot more to do.”


Sainsbury reported like-for-like growth in its third quarter of 0.9 percent, while Tesco posted 1.8 percent in the six weeks to Jan 5. But with consumer price inflation running at 2.7 percent that still left both with negative real growth.

Shares in Tesco rose 2.3 percent to their highest in a year, but analysts and investors cautioned that the solid growth partly reflected easy comparative numbers.

“The expression ‘one swallow doesn’t make a summer’ comes to mind,” said one top 20 investor in Tesco. “Have you been in a Tesco store recently and noticed a difference in the offering? Because I haven‘t.”

Shoppers in east London generally agreed. Pete Smith, a health worker, said he avoided Tesco because it was “too busy, too packed and the staff aren’t very helpful”.

M&S, a mainstay of British town centres and best known for reasonably priced but high-quality staples such as socks and underwear, saw third-quarter underlying sales of clothing, footwear and homewares fall a worse-than-expected 3.8 percent.

To compound matters, the update was rushed out late on Wednesday after being leaked to a broadcaster, leaving management to apologise in the face of questions over their competence.

Chief Executive Marc Bolland told reporters he was confident steps being taken by a new general merchandise management team would address problems in the area.

Shares in M&S were down more than 4 percent.

Additional reporting by Sinead Cruise, Sudip Kar-Gupta, Lorraine Turner and Arthur Fane; Editing by David Holmes

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below