Weekly Retail & Leisure News - 24 January, 2017
JLL's annual Christmas Trading Update reveals that over 80% of UK retailers and leisure operators that have disclosed performance figures for the key Christmas trading period have registered positive like for like (LFL) annual growth, with 50% delivering LFL growth in excess of 4% year on year.
Conditions remain challenging, however, and there were clear winners and losers within each sector. In the grocery sector the discounters were the frontrunners, with Lidl and Aldi growing market share; Tesco, Morrisons and Sainsbury’s are fighting back, however, and all revealed results ahead of expectations. In the department and variety store sector, Debenhams, House of Fraser, Fortnum & Mason and John Lewis reported strong sales growth after recent investment in their physical and e-commerce platforms; by comparison, M&S GM division performed poorly due in part to a failure to compete against the tide of Black Friday promotional activity. And in fashion, a number of premium brands benefitted from growing consumer demand for ‘affordable luxury’, including Jigsaw, White Stuff, Joules, Ted Baker and Superdry, which all registered strong growth, while Next and Primark struggled due to a variety of factors, including issues around stock selection and availability during the warm weather.
Overall, online sales were the clear winner, and retailers that provide customers with an integrated, seamless offer continue to benefit from real competitive advantage. In particular, the growing influence of m-commerce was evident from the trading updates of Jigsaw (mobile sales up +115%), John Lewis (+31%), Very.co.uk (+32%) and Made.com (+122%), while White Stuff, N Brown and Debenhams also reported strong sales growth through mobile devices. By contrast, a number of discount retailers such as Poundland, Primark, Sports Direct, B&M and Bonmarché announced disappointing results; all have limited online operations, in addition to being susceptible to discounting elsewhere, and also declining footfall across UK high streets.
One sector which is relatively immune to discounting is the foodservice sector. Christmas trade was generally strong for foodservice operators, with five of the top 11 performers coming from this sub-sector, due to growing consumer confidence and a firming of selling prices as consumers continue to move from a ‘price based’ to an ‘experience based’ decision.
Looking forward, despite an unpredictable Christmas, and a couple of New Year casualties, the consumer recovery appears to have taken hold. Consumers have money to spend, as a result of cheaper fuel, deflation and rising employment and wages, and 2016 should see strong sales growth for UK Retail. The key for retailers is to continue to invest in providing consumers with seamless retailing experiences, while adroitly managing costs at the same time.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838