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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Tesco, Ted Baker, M&S and Dunelm report differing Christmas experiences

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Tesco, Ted Baker, M&S and Dunelm report differing Christmas experiences
Tesco, Ted Baker, M&S and Dunelm report differing Christmas experiences
A tale of diverging retail experiences over the Christmas period was reported this week by a variety of multichannel retailers. While Ted Baker, Dunelm and Tesco saw online sales fly in peak shopping season, Marks & Spencer saw dotcom deliveries hit by distribution problems over the period - and sales fall as a result.

Tesco

Over Christmas itself, Tesco saw online sales grow across the board. Its internet grocery business grew by 12.9% in the six week Christmas period, its online general merchandise business by 22.2%, and online clothing by 52.4%. Click and collect grocery sales helped it to win a higher market share. Sales at its Express convenience stores grew by 4.9%, in keeping with an evolving supermarket strategy that puts the emphasis on enabling shoppers to buy how, when and wherever they want. Overall sales, in that six weeks, dipped by 0.3%.

Today’s third-quarter trading statement showed that in the 19 weeks to January 3, like-for-like UK sales were down by 2.9% on the same time last year – an improvement on the -5.4% recorded in the second quarter.

Chief executive Dave Lewis hailed this as the first steps in turning around the business. “We are seeing the benefits of listening to our customers,” he said. “The investments we are making in service, availability and selectively in price are already resulting in a better shopping experience. A broad-based improvement has built gradually through the third quarter, leading to a strong Christmas trading performance.” He thanked a Tesco team that he said had, in difficult circumstances, “begun the challenging task of reinvigorating our business.” But he warned of difficult changes coming in the future, and promised a later briefing on issues including Tesco’s work to regain its competitiveness in the UK market, through the sale of 43 stores, the appointment of Halfords Group chief executive as new UK and Ireland chief executive, and the consolidation of its head office to Welwyn Garden City.

Marks & Spencer

Marks & Spencer today said disruption at its Castle Donington distribution centre hit dotcom sales and deliveries over Christmas, with a knock-on effect on general merchandise sales. Online sales fell by 5.9% in the 13 weeks to December, while general merchandise sales were down by 5.8%, on a like-for-like basis, which strips out the effect of store openings and closures. Total UK sales were down by 1.1%, or 2.7% on a like-for-like basis, with overall group sales down by 1.6%.

Chief executive Marc Bolland said: “We had a difficult quarter in general merchandise, dominated by unseasonal conditions and an unsatisfactory performance in our ecommerce distribution centre.”

In the run-up to Christmas M&S.com extended its standard delivery promise from five days to 10 days, but today the company said in its third-quarter interim management statement that its delivery proposition was now back to normal following progress in addressing the causes of disruption. It said its website had handled peak demand well, and that customer metrics, from customer satisfaction to conversion, continued to improve. Before the Christmas disruption, online sales seem to have started to turn a corner, growing through October and November, following a first half of the year in which they fell.

Meanwhile, international sales were hit by “worsening currency and macro-economic issues across our Middle East and Russia franchise region,” although, said M&S, its business had performed strongly in India and other key markets. Food sales grew by 2.8% over the 13 weeks to December 27, with record 17% growth in Christmas week itself, although like-for-like sales grew by only 0.1%.

Ted Baker

Ted Baker said online sales grew by 65.7% in the eight weeks to January 3, compared to the same time last year. The lifestyle brand said it had held off any significant discounting until after Christmas in a period in which it saw total sales grow by 22.8% on last time. It said online growth in the US was helped by moving that website to the same hybris platform as its UK site. Since Christmas, sales had been strong and it said it expected to “end the year with a clean stock position.”

Ray Kelvin, Ted Baker founder and chief executive, said: “The group has delivered a great performance over the Christmas period across our global markets and distribution channels.

“Further underlying growth and brand momentum has been delivered as a result of our unswerving focus on product quality and the passion and dedication of our skills team.”

Dunelm

Finally, homewares business Dunelm saw sales reach £406.4m in the six months to December 27, 14% up compared to the same time last year, representing like-for-like growth of 6.2%. That growth was helped by a 70% increase in online sales. Taking out the online effect, like-for-like growth came in at a more modest 3.5%. The business said the increased reach of its multichannel Dunelm At Home service had helped drive sales of made-to-measure curtains and blinds. Furniture sales also grew by almost 60% to more than £20m in the period.

In this week's half-year trading statement, the company said it expected full year pre-tax profits would come in at £68m, following operating expenses of about £137, following investment in areas including logistics, the cost of home delivery fulfillment and staffing. The company also said it would increase its superstore numbers to 148 by the end of the year.

Chief executive Will Adderley said: “My priority going forward is to achieve growth consistently from each of our channels, including our core superstore format. We are excited by the opportunities available to us both from stores and online and we will continue to make the capital and revenue investments necessary to seize them.”

The retailer also announced the departure of Matt Davies, who's gone to run Tesco UK, as a non-executive director.

Commenting on Christmas trading figures to date, Tina Spooner, chief information officer at etail trade association IMRG , said: "The Christmas shopping period underwent a pretty seismic shift this year, with Black Friday being cemented as a major event for customers. Heavy pre-Christmas discounting has become a factor in the years following the market crash of 2008, leading to a test of nerve for retailers as customers have held out on making purchases in expectation of snapping up bargains – and Black Friday has built on this by focusing so much attention on a single day of guaranteed discounts.

"While it led to fevered activity among customers – online sales surged 135% year-on-year for the market as a whole – there has been a negative impact on margins as evidenced by some of the figures being published by retailers this week. The Black Friday genie is out of the bottle now and, while it will doubtless be an even bigger deal in 2015, retailers will need to develop clear strategies for capturing their share of the sales while ensuring it is a profitable exercise."

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