talking trade
Monday February 5 2018 THE NATIONAL MOTORCYCLE MUSEUM, BIRMINGHAM
All ‘I’s on Christmas… Consultant Michael Weedoncasts a critical eye over the big retailers' sales numbers for the crucial festive trading season
The hidden story here is that unless we’re all on a diet, grocery sales should rise every year, even if inflation is 0%. The reason is because there are more of us to do the shopping and eating. The population of the UK rises at just under
R
etail is one of a select band of sectors of the economy which interests everybody, not just
industry insiders. We all know the names of the big retailers.
We all shop with them. We are all avid for news. From mid-October onwards, the question was: “How will trading be?” At Christmas it was “how is trading?” And from New Year’s Day it was “how was trading?” Throughout ‘Blackvember’ and into
Christmas itself, there was a fog of guesswork, shot through with rays of light as provisional figures were released. The real results started to come in the second week of January, as retailers began to issue their seasonal trading statements. The January reports featured some very
happy, smiling supermarket bosses. Just nine businesses bank the vast bulk of £157 billion in annual grocery sales. Tesco booked food sales growth of 3.4% like-for-like. Sainsbury’s posted grocery sales up 2.3% in Q4. Morrisons sold 2.8% more like-for-like in the 10 weeks to January 7, with sales in the last six weeks up 3.7%. Of the ‘Big 4’ only ASDA turned in a turnover increase that beat food price inflation. The BRC reckoned that in the last quarter, overall food sales increased 2.6% like-for-like.
Inflation The first ‘I’ - Inflation - is something that many retailers will happily prefer to not talk about. Kantar Worldpanel reckons that grocery inflation reached 3.7% in the 12 weeks to December 31, while the Office for National Statistics (ONS) had it at 4.2% year-on-year in November. It looks as though none of the big supermarkets really grew sales volumes.
54 |
housewareslive.net
1% every year. That’s about half a million extra mouths to feed every 12 months. Now you might not be able to spot one extra person in a queue of 100 shoppers, but that 1% should put more than an extra billion quid in the tills each year. Inflation has been above the Bank of England’s 2% target since the beginning of 2017, driven by the relative weakness of the pound. Several big retailers have placed the blame on rising exchange rate-related costs for pressure on their margins. But this may not last: sterling has been
strengthening against the dollar since a low in the first quarter of 2017, although it’s still not back to pre-referendum levels. Even if the exchange rate just bobbles
around where it is at present, then inflation should fall – just because price increases drop out of the figures after a year has passed.
Incomes Which brings us to the second ‘I’: Incomes and their relation to Inflation. That’s important for the retailers and suppliers in non-food, because we can only spend what we earn once, so rising food prices nick sales from non-food shops. If food inflation does indeed fall towards the end of 2018, then all sorts of retailers should be able to allow themselves at least half a sigh of relief. Why? Because it would allow wage growth to sneak ahead of shop price inflation, so consumers might be more ready with the readies.
Internet The third ‘I’ is the Internet, focused on ‘Blackvember’: the newly-traditional month- long festival of Black Friday, preceding the month-long pre-Christmas sale period. The original emotional urgency of a short,
sharp, ‘buy-today-or-it-will-be-too-late’ store- based Sale has been entirely dissipated, as the Day has become the Week, the Fortnight and effectively the Month. And more and more of the benefit has gone to online operators. So, not the original thing at all. Online growth continued to outstrip offline increases. The IMRG Capgemini Online Retail
•
HousewaresLive.net Christmas 2017 on London’s Oxford Street
Sales Index [IMRG is the UK’s online retail association which has been tracking online sales since 2000] reported online sales up 11.7% year-on-year and 49.7% up from October. So Blackvember really is a thing. It has been put to me that the online part of multichannel has ‘absorbed all the growth in retail’. It hasn’t. Figures from the ONS show that over the 10 years to 2016, UK retail added about £80 billion to total takings and online sales took just over half (53%) of that growth. The rest ended up in the tills of shops. However, what is clear is that in 2015 and 2016, that share of the gain rose to 83% and 78% respectively. It will be a while yet before the 2017 figures arrive to complete that set. But success in retailing and growth in
turnover do not depend on multichannel selling alone – ask Primark. Its continued powerhouse expansion is built on real stores, not e-commerce. So, in 2018, inflation should moderate, food should be a little less greedy with the spend, and online will still not have quite taken over physical retail. With the New Year just under way, all eyes will already be on the long lead- up to next Christmas.
• Michael Weedon is managing director of exp2 Ltd, which researches and creates reports for clients in the retail industry, including the Local Data Company (LDC) for which exp2 provides content. He established epx2 in 2016 from a leading trade association role.
Michael’s contact details are: Mobile: 07411 763 551 Email:
Michael.weedon@exp2.co.uk Tw: @michaelweedon
•
twitter.com/Housewaresnews
January/February 2018
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56
