Chief Market Strategist, Cantor Index
THE official retail activity figures, which are posted monthly or at specific times like Christmas, are accurate but often indecipherable to the layman. The small print is where the message is.
And the most recent figures suggest that Christmas was great for some, but brutal for others. The situation was particularly bad for local high street specialists, which are up against consumers with less disposable income and visceral competition from household brands. The advent and effectiveness of online trading, plus pressure from discount retailers like Amazon, have exacerbated the declining effectiveness of an already over-crowded high street, dominated by “one-stop-shop” supermarkets. The village corner shop seems to be staring into a vortex of despair. How can it survive?
Tragically, HMV has gone into administration. And on Friday, Jessops gave up the unequal struggle, with 187 outlets shut by its administrator. It follows in the footsteps of Comet just before Christmas, while JJB Sports and Clinton Cards remain under the cosh. But there were also some very bright spots on the high street – Next, John Lewis, Primark (owned by AB Foods) and TopShop, to name a few, did really well. Debenhams increased sales but slashed prices. It strikes me that it is all about having attractive products at appetising prices on the shelf – or on the net – at the right time. Retail is a fine art.
As for the retail juggernauts, Tesco regained some poise, with like-for-like sales over Christmas up by 1.8 per cent. Phil Clarke, Sir Terry Leahy’s successor as chief executive seems to have got hold of the bit and galvanised his troops. Tesco has a 30 per cent share of the market, so its expansion will need to be focused abroad. WM Morrison disappointed, with sales down 2.5 per cent, and J Sainsbury did a tad better than treading water – up 0.9 per cent. We need to remember that consumer price index (CPI) inflation is now nearly 3 per cent; so these numbers are not great.
Marks & Spencer’s effort was such a disappointment, with household goods sales down by 3.8 per cent. Chief executive Marc Bolland’s reluctance to discount was a pathetic and unacceptable excuse for such an anaemic trading statement. Let’s not mince words. M&S’s fashions are dowdy and very unattractive against the likes of TopShop, Next, and John Lewis. Belinda Earl joins shortly from Debenhams. She may not bring her influence to bear until August – not before time. There may be little growth in the UK this year, so being selective with this sector may be imperative.