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IREU Top500 Brand Engagement Dimension Report 2018

IREU Top500 Brand Engagement Dimension Report 2018

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PEAK 2017 John Lewis, M&S, Tesco, Sainsbury's and more on their Christmas trading

PEAK 2017 John Lewis, M&S, Tesco, Sainsbury's and more on their Christmas trading
PEAK 2017 John Lewis, M&S, Tesco, Sainsbury's and more on their Christmas trading
Here are the Christmas trading highlights from the IRUK Top500 general retailers, grocers and department stores that reported their figures this week.

Department stores



John Lewis

The department store, an Elite retailer in IRUK Top500 research, said Black Friday was the most successful day in its history and contributed to its biggest ever week of sales, up by 7.2%, year-on-year. Gross sales in the six weeks to December 30 reached £1bn, up by 3.6% on the same period last year.

It said that 65.5% of its click and collect sales were collected from Waitrose stores during the period, and that record demand meant it was able to extend its deadline for click and collect in John Lewis shops to December 23 for Christmas Eve pick up. Customer Christmas events saw attendance lift by 15% and sales by 18%.

John Lewis Partnership chairman Sir Charlie Mayhew said "We focused on our differentiated product offering, attention to service and strong value proposition, underpinned by our Never Knowingly Undersold promise."

But the cost of maintaining that promise is set to have an effect on profits, he said.

"The pressure on margin seen in the first half of the year has intensified because of our choice to maintain competitive prices, despite higher costs mainly due to the weaker exchange rate," said Mayhew. "This will negatively affect full-year financial results as indicated previously.

"Looking ahead to 2018/19 we expect trading to be volatile due to the economic environment and anticipate that competitive intensity will continue, driven by the structural changes taking place in the retail industry. We are well placed to continue building the strength of our two leading brands through these changes and will maintain our current investment plans. Our focus continues to be offering our customers the best range of products and the best value, supported by a market leading service."

Marks & Spencer

The food-to-homewares business, an Elite retailer in IRUK Top500 research, reported an overall fall in sales in the Christmas quarter of its financial year.

Group sales of £3.2bn were down by 0.1%, with UK retail sales of £2.9bn down by 1.1%, or 1.4% on a like-for-like basis. Clothing and home sales (-2.3%) were hardest hit with food sales up by 3.6% in total, but down by 0.4% LFL. Online sales via M&S.com reached £309m, representing 3% growth on last time. International sales of £309m were down by 9.8% following the decision to close its stores in loss-making markets.

The retailer did not take part in Black Friday in 2017 and said revenue grew both in-store and online during the weeks leading up to Christmas. But an "unseasonal" October meant revenues were down and there was more stock in the December sale.

Steve Rowe, chief executive, said the retailer had a "mixed quarter" with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our food like-for-like sales but that full-year expectations were unchanged. He added: "We continue with the accelerated transformation programme we outlined in November and have recently taken several important steps to reshape the business for the future. These include a new technology partnership and organisation, and the sale of our Hong Kong based business in line with the streamlined franchise-led model we are adopting for international."

House of Fraser

The department store, a Leading retailer in IRUK research, said sales fell both on and offline over the six weeks to December 23.

Web sales were down by 7.5% over the period, compared to the same time in the previous year, and store sales were down by 2.9%. On Black Friday alone, store sales rose by 0.8% and web sales came within 1% of last year's record. Despite the fall in revenue, efficiency gains in its logistics business and a move away from discounting meant that the web store contributed a similar profit (£6.1m) for the period as it did in the previous year.

Its ongoing transformation programme, it said this week, is set to save it £26m in savings, of which £10m came in 2017 and £16m are scheduled for 2018. The programme is aimed at creating "an agile retail organisation with a multichannel structure supported by a technology platform that will be as responsive and flexible as other market leaders. Our customers will win by House of Fraser becoming an adaptable business capable of matching their demands on a local level."

Changes to the business are set to include moving to a single stock pool to service the multichannel business.

House of Fraser chief executive Alex Williamson said: "We are a business in transition. Our focus is on driving profitability rather than chasing revenue at any cost. We are not a business determined to sell everything to everyone at any price. What’s important, and we are seeing some success in the numbers, is to keep our discipline in selling those products that are loved by customers and profitable for House of Fraser.

“The trajectory of our web business is now back on track following the re-platforming carried out earlier in the year; our investment in our logistics and supply chain is beginning to yield dividends and through the careful curation of our product mix we grew margins over the Christmas period by 0.5%, at constant exchange rates. Let’s not forget we can trade with the best of them too as we delivered another record Black Friday performance.

“The execution of our transformation plans continues at pace, and we are confident that we will deliver an exceptional experience for our customers and brand partners whilst delivering a sustainable and profitable future for House of Fraser.”

Yuan Yafei, chairman of its Chinese parent company Sanpower, said it was committed to its long-term investment in the UK retail market and would provide all the support needed to ensure House of Fraser's success.

Supermarkets



Tesco: record Christmas trading

Tesco enjoyed a record Christmas in the UK and Ireland markets, with UK sales in the 19 weeks to January 6 up by 1.9% LFL, including food growth of 3.4%. It saw its biggest ever UK sales week as fresh food grew by 4% to outperform the market. In that week customer transactions reached 58m and there were 770,000 online grocery deliveries, part of a 5% online sales growth for the period.

Chief executive Dave Lewis said: "We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years. Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK."

He added: "Our colleagues and supplier partners have done a fantastic job serving our customers better every day throughout this exceptionally busy time, and I want to thank them for everything they have done.

"We are confident in the outlook for the full year and are firmly on track to deliver our medium-term ambitions."

Sainsbury's: food sales grew strongly

The supermarket, a Leading retailer in IRUK Top500 research, reported a record Christmas week in a third-quarter trading statement out this week.

It said retail sales, excluding fuel, rose by 1.2% in total and by 1.1% on a like-for-like basis over the 15 weeks to January 6. Food sales were up by 2.3%, with online sales up by 8.2% and convenience sales up by 7.3%. But sales of general merchandise, through both its Sainsbury's and Argos brands, were down by 1.4%, although online sales grew by more than 8%.

Fast track collection grew by 39% and delivery by 25% during the quarter, especially during Black Friday and in the final run up to Christmas, when shoppers could order for same day delivery until 1pm on Christmas Eve. Its last same-day delivery was at 6.39pm that day. So far 164 Argos stores have been opened in Sainsbury's supermarkets and it also has 15 Mini Habitat stores in supermarkets. There are also 204 digital collection points in supermarkets, including 37 in convenience stores for shoppers to pick up Argos, DPD, eBay and Tu clothing online orders.

Chief executive Mike Coupe said: "We had a strong Christmas week, with record sales, over 340,000 online grocery orders and stellar growth in Argos Fast Track delivery and collection. Online accounted for 20% of the Group's sales during the quarter.

"We delivered an excellent operational performance across the group, with great availability, strong customer satisfaction scores and our lowest level of waste ever at Christmas. Friday 22nd was our biggest sales day for stores and we also delivered an online grocery order to customers every second."

It now plans to focus on differentiating its food offer and extending multichannel services including same-day grocery delivery, now available from 93 stores, and SmartShop scan as you go shopping.

Waitrose: strong online sales

Waitrose sales of £928m were up by 1.4% on last year, or 1.5% on a like-for-like basis. The supermarket, a Leading retailer in IRUK Top500 research, saw the biggest week in its history for online grocery sales. Tastings and one-day offers both proved successful.

General, electrical and specialist retailers



AO World: two-week Black Friday period



AO World, owner of Leading IRUK Top500 retailer AO.com, said the website's revenue grew by 11.2% in the quarter to December 31, while income from its European business grew by 58.4% to boost overall group revenue by 16.6%. The retailer said it expected full-year results to meet analyst expectations.

Chief executive Steve Caunce said: "We are particularly pleased with the double-digit sales growth in our UK business, which has been achieved against a fiercely competitive environment and normalised marketing expenditure. Our customers in the UK benefitted from our Black Friday deals this year over a two-week period enabling us to manage demand more effectively and deliver an even better experience for customers. We are encouraged by the sales growth in our newer categories and we have continued to deliver excellent customer service throughout the period across the business.

"Our Europe operations are progressing in line with our plans and we are pleased with the strong growth achieved, given the limited above the line marketing expenditure. Our brand is attracting both new and repeat customers in mainland Europe and customer satisfaction remains high.

"Looking ahead, although we need to be mindful of the uncertain economic outlook (particularly in the UK), as long as we are relentless in our focus on making things easy for our customers, we can be confident that they will continue to choose the AO Way."

Game Digital:

Game enjoyed a boost from sales of relatively new gaming hardware, including the Nintendo Switch and PlayStation 4 ahead of Christmas. It also saw use of its in-store Belong gaming arenas reach more than 155,000 hours played in the first 23 weeks of its financial year.

Group sales grew by 5.2% between November 1 and January 6 2018, and by 3.8% in the 23 weeks to the same date. UK sales (2.9%, peak period) grew behind those in Spain (6.3% peak period).

Martyn Gibbs, chief executive, said: ""Over the peak period, Game focused on its core trading in all channels across both its geographies in highly competitive markets whilst delivering further cost savings in UK retail and made good progress with its strategic initiatives. These additional cost savings mean our performance remains on track; as ever our full year result will also be subject to continued availability of consoles, such as Nintendo Switch and the timing and success of new game releases.

"BELONG continues to make pleasing progress, with plans to invest in the roll out of further arenas in the UK from February onwards, and we have exciting plans to open our first two arenas in Spain later this year."

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