The British Retail Consortium‘s November year-on-year assessment of retail expenditure showed just 0.4% growth on what was widely recognised to be a disastrous 2011. Total sales grew 1.8% over the corresponding period from 2011, and online sales jumped 7.5%. However, with inflation running at 2.7%, the retail sector appeared in decline.
During December, Christmas bargain hunters conspired to play the increasingly popular game of festive brinkmanship, holding their credit cards close to their chests in an effort to coax even greater discounts out of desperate retailers. In many cases, the strategy worked, with 70% discounts on the high street being a common sight.
Some are clearly getting it right
Initial anecdotal evidence suggested that several retailers, including John Lewis and Next, experienced bumper pre and post Christmas sales performances, with John Lewis reporting 13% and 44% year-on-year growth for in-store and online sales respectively. The picture has become clouded by less impressive results from Marks and Spencer, Sainsbury’s and Morrisons. Additionally, the first retail casualty of 2013 has emerged as Jessops.
Casualties are likely
Only an eternal optimist would conclude that Britain’s high street will emerge from the festive season entirely unscathed. There will be further casualties. However, it appears that consumers may have thumbed their noses at austerity and splashed out on much needed festive good cheer; welcome news for retailers and those invested in the retail sector.
This article is part of Asset Class winter 2013