Thursday, 12 January 2012

Post-Christmas Blues

Image: Can Stock Photo Inc.
January is a cruel month, especially for retailers who announce details of trading over the Christmas period. In fact this year, at first glance, the numbers don’t look too bad. John Lewis announced – as ever – good figures as did the new kid on the block Supergroup – owners of the ├╝ber-trendy Superdry brand.  Debenhams figures, too, showed that there is life in a more traditional format. However, while the sales figures were ok, the major theme on the high street was discounts, with hard pressed consumers looking hard for bargains.  The other interesting trend was the shift of shopping away from the high street to the virtual world. Figures in the Financial Times today indicate that non food internet and food sales rose by an astonishing 20%, continuing the trend of the last few years. This was illustrated by John Lewis, who saw a huge demand for its 'Click and Collect' service which successfully leveraged its retail base and offered consumers the ease of internet shopping with the convenience of 'bricks and mortar'.  Clearly, an internet strategy is not an optional extra for retailers who are having to adapt their business models to reflect these new realities.

In the Food Retail arena, the champagne at Tesco seems well and truly flat and a disappointing trading statement today has cast a shadow over the sector. Recent figures from the British Retail Consortium indicate that the gross margin at food retailers has fallen by about a third to less than 6% since 2006, highlighting the competitive nature of the industry and how increases in sales have been bought at the expense of profitability. We are probably all aware of how much new retail space has been launched over the last few years, with supermarkets becoming hypermarkets and convenience stores popping up on every street corner; indeed, some estimates put the future building plans of the big four as the equivalent of adding another company the size of Sainsbury to the industry.  This competition is good for you and I with our shoppers hats on, although creates some challenges for the Chief Executives of our supermarket chains.

ROB BURGEMAN

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