Retailers across a range of sectors are reporting their first figures after a Christmas that few could predict with certainty. We have figures from retailers in the grocery, fashion and homewares sector figures below – offering insights not only into the peak just past, but into how retail is changing in the longer term.
Figures from Morrisons, Joules, Dunelm and Footaslyum seem to be broadly in line with the trends detected over peak trading of customers shifting their shopping online, while looking for discounts.
Morrisons: benefitting from changing customer behaviour
The supermarket, a Leading retailer in IRUK Top500 research, reported growth over Christmas – primarily thanks to wholesale deals to supply its groceries to retailers from Amazon’s Prime Now online grocery delivery business, to McColls’ corner shops and convenience stores.
Like-for-like sales were up by 3.6%, excluding fuel, in the nine weeks to January 6. But while its own retail sales contributed 0.6%, the larger contribution (3%) came from wholesale. Total sales were up by 4% excluding fuel.
Morrisons says it saw consumer behaviour change over the six weeks of peak trading, compared to previous years, but that it benefited as it offered competitive prices and focused on customer satisfaction.
“This is Morrisons’ fourth consecutive Christmas of like-for-like sales growth during the turnaround,” said chief executive Dave Potts. Our performance shows colleagues are listening hard and responding to the customer, providing consistently great value and good quality when it matters most.” He added: “Morrisons is well set to keep improving the shopping trip and become more and more relevant for more customers.”
Year-end expectations were unchanged.
Commenting, Catherine Shuttleworth, founder and chief executive of Savvy, said Morrisons’ growth was primarily through “the smart strategic alliances that they have made through wholesale arrangements which play to the longer-term future for the business.”
Angel Maldonado, founder of search and navigation specialist EmpathyBroker, said: “Morrison’s success this Christmas shows why it’s so important to create a feel-good customer experience, whether that’s in-store or online. This is especially important when it comes to Christmas – a period where every single retailer offers deals and promotions – and having a friendlier and warmer checkout experience is clearly a significant differentiator.”
Joules: almost half of Christmas sales made online
Joules said ecommerce accounted for almost half of its sales over the key Christmas trading period.
The lifestyle brand, a Top150 retailer in IRUK Top500 research, said its retail sales in the seven weeks to January 6 were 11.7% in up on the same time last year, as sales grew across its product categories. Joules said its profit expectations were unchanged.
Online sales grew not only through its own website but also through the websites operated by its concession partners. This was driven by a good performance through Joules’ own digital channels as well as through its concession partners’ websites.
Chief executive Colin Porter said: “The group’s performance was again underpinned by the strength of the Joules brand, our growing and loyal customer base, and the flexibility of our ’total retail’ model which continues to enable Joules to adapt to changing customer shopping behaviours.”
Commenting, Kate Ormrod, lead analyst at data and analytics business GlobalData, said:
‘‘Joules has once again set the bar high for its contemporaries in the lifestyle segment when it comes to festive results, producing yet another double-digit retail growth performance.” She added: “Trading was supported by what Joules billed as its ‘biggest Black Friday event’ which impressively started on November 12, a full 11 days before actual Black Friday. Clearly getting ahead of rivals’ promotions helped matters given shoppers’ more cautious spending. The offers of up to 50% off were in line with the prior year, so the lack of even deeper discounting is further confirmation that trading held up for the brand in the run up to Christmas despite 2018’s challenges.
“While an additional five stores (123 across the UK & ROI, versus 117 last year) aided growth, online remains a star performer for Joules – accounting for almost half of total retail sales during the seven-week period, just as it did in H1 FY2018/19. Joules’ online success has been bolstered by third-party retailers, with the brand selling on the likes of the Next and Very.co.uk sites among others. Joules must be accessible, and therefore third-party retailing is an important part of its strategy, however it must be careful not to over-dilute the brand online – keeping exclusive ranges and styles for its own site in order to drive traffic.’’
Footaslyum: discounts fuel online and store sales – at a cost to profits
Both online and stores made good contributions as athleisure specialist Footasylum, a Top100 retailer in IRUK Top500 research, reported a 14% rise in sales over the Christmas period. But the retailer said that the sales had been achieved through discounting and promotions that were likely to hit profits in the longer term.
Footasylum said its total sales reached £102.3m in In the 18 weeks to December 29, with online sales of £36m up by 28% on the same time last year, and store sales up by 5% at £63.7m. Wholesale revenue doubled from £1.3m to £2.6m.
The retailer, which started life with a multichannel business model rather than catching up from a legacy store estate, now sells from 70 UK stores, after completing five openings and three upsizes ahead of Christmas. It also sells online and through third-party retailers.
But the retailer said that while higher levels of promotions and discounting had fuelled sales, they were likely to hit its profits in the longer term, and while it still expected full-year sales to be on track, it now expected profits to be lower than previously expected.
Executive chairman Barry Bown said: “In the context of the current tough conditions on the high street, we are encouraged to have delivered revenue growth across all of our channels and major product categories, with online and wholesale continuing to perform particularly well. We have also been pleased by the performance of the five new store openings and three upsizes that we completed in time for Christmas.
“However, the short-term outlook is undeniably challenging, and we continue to maintain our focus on cash, working capital and inventory management, as well as reducing costs across our operations. The current trading conditions have led to significant discounting and promotional activity across the sector, and this in turn has impacted our gross margin expectations for FY19.”
Grocery spending shifts online and in search of discounts, says Nielsen
Shoppers visited more supermarkets more frequently this Christmas, but grocery sales growth slowed, new analysis from Nielsen suggests.
The analyst says that grocery sales grew by 1.8% over the four weeks to December 29 – down from the 3.7% growth it saw at the same time last year. Behind this, it suggests, were vouchers and price discounts that encouraged shoppers to “chase the deal” by visiting a number of supermarkets in order to ultimately spend less.
As a result, the number of trips increased but average spending was down by 3% over the period, compared to a 3% rise in the average spend at the same time last year.
It points to a contrasting 9% rise in online grocery sales over the period, as 7.5% of all grocery sales took place online. It also saw a continued shift towards the discounters over Christmas, who won 13.9% of market share for the 12 weeks leading up to Christmas. Over the same period, Aldi sales increased by 11.7% and Lidl by 13.6%. But in the final week the all-important last four weeks, there was improved sales growth at Tesco and Morrisons, while momentum at Asda and Sainsbury’s slowed.
Mike Watkins, Nielsen’s UK head of retailer insight, said: “Growth slowed this Christmas in comparison to last. We can attribute this to several factors: consumer grocery shopping habits are changing, with shoppers now opting to spend less on doing one ‘big shop’, instead preferring more frequent, smaller trips to the supermarket, spreading the cost across multiple retailers to increase choice.
“Moreover, with over half (57%) of consumers not confident about their finances, shoppers are more budget-conscious and the various promotions and price cuts are a response to help them manage their household budget. Finally, the incremental growth continues to come from the key categories of drinks, confectionery and snacks.
“It was a reasonable but not spectacular Christmas, indicative of how shoppers will now spread their Christmas spending across more retailers and different channels.”
Dunelm: growth online and in-store
Homewares retailer Dunelm reported fast sales growth both online and in its stores in the run-up to Christmas.
Multichannel – online revenues plus income from reserve and collect and in-store tablet ordering – accounted for 16.5% of revenues in its second quarter.
Dunelm, a Leading retailer in IRUK Top500 research, saw sales grow fast online (+37.9%, to £36.1m) and in-store (+5.7% to £246.4m) in the 13 weeks to December 29 on a like-for-like basis that strips out the effect of store and business openings and closure. Overall like-for-like (LFL) sales of £282.5m were up by 9% over the quarter, with total Dunelm sales up by 9.6% at £304m, while total group sales, including those from the discontinued businesses, were in positive territory at 2% to £303.6m.
“The positive like-for-like revenue growth both in stores and online, highlights the strength of our customer offer,” said Dunelm chief executive Nick Wilkinson. “Our multichannel proposition is improving all the time and we are looking forward to introducing our new web platform in the summer, using more flexible technology which will allow us to better serve our customers in a changing retail landscape.”
The figures suggest that while Dunelm shoppers are taking up its online services with relish, a visit to its stores remains a priority for the majority. There’s more detail on Dunelm’s figures here, as we report on its half-year trading update.