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Market Commentary

​​Weekly Retail & Leisure News - 29 September, 2014

​House of Fraser and Aldi announce positive results

​House of Fraser has announced that LFL interim sales have risen by 4.2% to £542 million in the third quarter to July 26. Turnover continued to grow in the period, meaning that sales for the year so far are up 5% compared with last year. House of Fraser remains at the forefront of multi-channel retailing in the UK; online orders increased 29% in the same period and now represent 14% of group sales. It also announced that customers will soon be able to use its click-and-collect service at a Caffe Nero shop in Cambridge, commenting that the link-up clearly makes sense, as the retailer has many online shoppers with a Cambridge postcode but no store in the city.

House of Fraser's success is indicative of the improving situation for non-food retailing in the UK, as we saw non-food sales increase 3.9% on a three-month average at the end August. The picture, however, remains less rosy for food where sales declined by 1.6% over the same period. Tim Vallance, Head of JLL's UK Retail and Leisure commented "The race by the big four to beat discount retailers at their own low price game has led to a record low in the grocery market growth level. Price strategy alone will not define who wins the grocery war."

Against this backdrop, Aldi's results this week are particularly impressive. The discount supermarket operator announced that UK sales rose from £3.89bn to £5.27bn in 2013, helped by winning new customers, as it added more fresh food and upmarket ranges. Aldi UK's pre-tax profit rose 65% to £260.9m in the year to December 31 2013 as LFLs rose 30%.

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