Source: BBC So, it really was a mixed bag for retailers last year, with budget-friendly food retailers such as Aldi and Lidl walking away with the best profits:
Budget food retailers are the winnersAldi said it experienced ‘its best-ever Christmas trading’ season on record, seeing sales up by 10% on the previous year, and racking up nearly £1bn over the month of December 2018. Whilst not quite up there with Aldi’s almost intergalactic Christmas 2018 performance, fellow budget supermarket chain, Lidl also performed well, seeing sales rise by 8%.
“Aldi and Lidl had a combined market share of 12.7% over the 12-week festive period, their highest-ever for the Christmas period.” – Kantar MediaIt seemed that all the pre-Christmas talk about consumers wanting to spend less came true, as a whopping two-thirds of UK shoppers went to either Aldi or Lidl to do their budget-conscious shopping.
Legacy retailers lag behindBoth Debenhams and Marks & Spencers experienced a tough and disappointing Christmas trading season. The former which is set to close up to 50 stores, said sales in the six weeks leading up to to 5 Jan 2019 dropped by some 3.4%. Over the longer 18-week trading period, sales fell to a substantial 5.7%. Christmas 2018 was the season of budget-conscious shoppers across the consumer board and spilt into other forms of retail, including clothing and homeware. The reluctance of Marks & Spencer to get involved in the pre-Christmas offers caused them a sales drop of 2.2% in the 13 weeks to 29 December 2018. They were a victim of the Aldi-Lidl onslaught, where their food sales fell by 2.1%, whilst its clothing and home sales division dropped by some 2.4%.
“For Marks & Spencer, Next is doing a better job and in Debenhams’ case the 1980s aren’t here today.” –Bill Grimsey, former chief executive of Wickes, Iceland and Focus DIYMother and baby retail chain, Mothercare, was another sore loser during the festive trading period, experiencing a shocking 11.4% in store-based sales, and an even greater digital sales decline of 16.3%. Read more about the Mothercare story below: [article id=”130134″ title=”Mothercare encounters retail misery”]
More losers: Sainsbury’s and HalfordsSainsbury’s took a hit late last year, experiencing a general 1.1% decline in sales. However, the brand was most affected by drops in sales across their non-food offerings, such as clothing. General merchandise sales dropped by 2.3% whilst overall clothing sales fell by 0.2%. Halford’s, the ‘bike and outdoorsy people’, experienced a 1.7% decline in sales across their stores for the 14 weeks to 4 January 2019. But what reason(s) are the brand giving for their declining retail performance? The answer? Wet and mild weather during the autumnal months…
An entrepreneur’s opinion: Mark Williams, former President (2018) of Revo, and Chair of UK Government Supported Distressed Retail Property Taskforce (2012-2014)“2019 is going to be the year of reckoning on the High Street.” “My predictions are we that will see the final shake out of poor under-invested and debt-saddled retailers, where the impact of the structural changes in the sector, including business rates, and legacy real estate portfolios will finally hit home.”
“The issue is going to be around how we repurpose our towns and cities into nicer and more relevant places.”“That is the core question we should be asking ourselves as the viability and the ability of the private sector to do it are seriously unlikely.” “So in the way governments intervened on major infrastructure projects in the USA in the 1930’s and in the UK in the 1950s and 1960’s, now is the time for government intervention in the UK to save the high-street. The only problem is we don’t have a functioning government to help us!”
HMV: An old relicFollowing the festive period, HMV was forced to call in administrators for the second time in six years. Owners Hilco, who rescued the company from its first administration back in 2013, blamed a “tsunami” of retail challenges for the massive decline, signifying that there are some high-street retailers that are simply too old-fashioned to be saved. Perhaps the likes of HMV will go the way of the Blockbusters of this world. As in the digital age, consumers no longer need to buy their goods from a physical business that only offers them one type of product. The internet simply offers customers too much for them to say no to.
Advice for 2019 (from a former Selfridges consultant)Former Selfridges retail aide, Alan O’Neill, says that managers must take more risks if they want their physical stores to survive in 2019. So, what should they do? Here are some of his main points of advice:
- Negotiate with landlords
- Cut excess shopping space
- Expand online
- Stop discounting for promotional reasons
- Make use of January sales to shift old stock
- Avoid cutting costs including staff and product quality
- Invest in campaigns and ‘the in-store experience’
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