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Winners and losers on the high street

Winners and losers on the high street

I caught a glimpse of an interesting item on BBC Breakfast this morning (15.02.2016) suggesting that High Street sales were up and had rallied in January so I had a quick shufty around to find out what the experts are saying.

Apparently the festive period proved slightly tricky for many retailers with sales at their worst since Christmas 2008 (I’m sure I wrote that exact same phrase this time last year which is not a great sign). The cold snap we were expecting never materialised meaning that many chains were left hanging onto cold weather clothing. Many customers are also now extremely wary of paying full price for anything and wait until they see the discounts either in the pre-Christmas sales or in New Year sales. At the same time of course, online shopping has risen inexorably. This all means that some high street retailers had a pretty miserable time in the run up to Christmas after a not particularly great year.

Sales, sales everywhere ... and nothing I want to buy

Sales, sales everywhere … and nothing I want to buy

The winners and losers on the UK high street this Christmas.

Were high street sales up over Christmas? Who were the winners over Christmas? Well, apparently Tesco did well with like for like sales finally up by 1.3%, after a 1.5% sales drop in the 13 weeks ending 28th November. John Lewis were again up, with a 5.1% increase in like-for-like sales in the six weeks to 2 January and online sales up more than a fifth (accounting for an impressive 40% of their total sales. WH Smith reported a 2% rise, which they attributed to sales of adult colouring books. Debenhams and House of Fraser were also happy with sales and Morrisons continued its revival with improved sales of 0.2% (experts had predicted a 3% decline in sales). JD Sports increased its like for like sales by 10.6% in the five weeks to 2nd January.

So who lost out in the festive period? Marks and Spencer’s like for like sales fell 2.5% in the 13 weeks to 28 December, because while food was up 0.4% for the period, general merchandise, including gifts and clothing fell by 5.8%. Retail consultants Conlumino have suggested that Marks and Spencer’s fall from grace is because they try to do too much, “it is wedded to this kind of ‘we have to be cheap, we have to be premium, we have to be all things to all people. Of course the result is it ends up being not very much to anybody.” That’s a great lesson for small business to take note of.

Clothes giant Next reported disappointing sales which it blamed on the warm autumn and winter weather. Sales fell 0.5% between 26 October and 24 December in store, but online sales were up 2% online, meaning that overall sales rose by 0.4% for the period.
Surprisingly Argos didn’t do so well. Like-for-like sales fell 2.2% in the 18 weeks to 2 January, but Sports Direct were the real loser, issuing a profit warning that sent shares tumbling. They again blamed the weather, although given they sell exercise clothing and jogging bottoms which people wear all year round, this does seem a little limp.

Sports Direct have suffered from negative publicity which hasn't helped their sales

Sports Direct have suffered from negative publicity which hasn’t helped their sales

An investigation by The Guardian newspaper into conditions at Sports Direct’s warehouse in Derbyshire has generated considerable negative publicity in recent weeks. The Guardian have been investigating zero hours’ contracts and working conditions within the company, and the negative publicity does seem to have stuck. Waitrose recorded a fall in sales of 1.4% in the 6 weeks to January 2nd because of ‘intense competition’.

Primark complained that it sold fewer coats, hats, scarves and thermal clothes than it had the previous year but has since seen sales bounce back this year.

High street sales up?

In spite of a dodgy Christmas for some, as Helen Dickinson, chief executive of retail trade body the BRC, said: “Following on from a somewhat disappointing Christmas period for retailers, the new year kicked off to a strong start”. it seems that the high street rebounded well in the early part of this year, thus far. According to some statistics from the British Retail Consortium-KPMG there was a 3.3 per cent rise in January (year on year), particularly as you would expect for the larger or “big ticket” purchases such as furniture. I always find this of. When don’t sofa retailers have a sale on? Why buy in January as opposed to their Valentines’ sale, or ‘end of winter’, or ‘Spring sale, or Easter sale etc.

But anyway, I digress. The BRC-KPMG report also noted that online retail continued its dominance of the retail market, with sales in January up just under 15 per cent versus January 2015, which in turn were up 11.7 per cent over January 2014.

Dickinson has said, that “This was the best performance for retailers since September and ahead of the three- and 12-month averages.” She also noted that the new Year sales drove a better performance in clothing and footwear, although food sales decreased slightly. Fashion retailers were the strongest performer recording a year-on-year rise of 1.9 per cent followed by homeware and furniture retailers, up 0.8 per cent

Howard Archer, chief UK economist at IHS Global Insight, also seemed positive about the “pretty solid” retail sales growth in January, stating that “The overall impression is that consumers remain price savvy and are particularly keen to time their spending when they can get the best value for their money.” No kidding?

So will high street sales remain up? Archer reckons that “The prospects for consumer spending still look relatively heathy for 2016, with purchasing power likely decent and employment high and rising.” Well time will tell, I guess.

According to Sophie Michael, head of retail and wholesale at BDO accountancy firm, “The lull between Black Friday and the January sales was particularly noticeable at the end of 2015 and beginning of 2016.” She notes that “retailers might be getting better at attracting the new generation of savvier shoppers in discounting periods, but margins will suffer unless they sell full-price stock too.” Something for us all to think about and in the meantime we can look forward to some wholesale bargains for you guys!

Over to you

How was Christmas for you? What sold well? How’s 2016 been so far? Drop us a comment below or join the conversation on Facebook 🙂

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