A two-speed high street

Kasmira Jefford
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A CLEAR split between Britain’s winners and losers in the battle for consumers’ cash this Christmas emerged yesterday, as three of the biggest retail chains revealed worse-than-expected trading.

Poor results from Tesco, Morrisons and Marks & Spencer added to dreary updates from Sainsbury’s and Mothercare, with heavy discounting, weak consumer spending and the rising discount sector all taking their toll on sales.

The latest figures are in sharp contrast to buoyant reports already released by retailers including Next, House of Fraser and John Lewis, whose strong online offering helping them to offset shoppers abandoning the high street.

Supermarket Morrisons was forced to issue a profit warning yesterday after like-for-like sales plunged 5.6 per cent, while rival Tesco revealed a 2.4 per cent fall in UK underlying sales and admitted that full-year profits could be as much as £150m lower than it guided to just last month.

And under-pressure Marks & Spencer blamed mild October weather and higher levels of discounting for a worse-than-expected 2.1 per cent fall in its underlying sales of general merchandise – which includes clothing – in the 13 weeks to 28 December. The 130-year old chain was saved by its food sales, which outperformed those at its larger supermarket rivals, rising 1.6 per cent on a like-for-like basis.

The decline of in-store sales over Christmas was also reinforced by new figures that show online sales roaring ahead – and barely any growth for brick-and-mortar retailers.

Overall sales rose by 1.8 per cent in December from the same month last year, according to data out today from the British Retail Consortium (BRC) and KPMG.

However, the vast majority of the boost came from spending on the internet. After stripping out online transactions, spending rose by as little as 0.3 per cent, far below the rate of inflation.

Shore Capital analyst Clive Black said the supermarkets’ troubles this Christmas highlighted a more serious structural problem.

“Never before have the Big Four all lost market share at the same time. And it has huge implications for how they will trade, price, and promote and market this year. If they don’t change their ways they will find themselves in irreversible decline.”

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