2008-12-08-OC_C-Xmas_wrapped_up_4页_1mb

XVAS Christmas Trading Index 2008 Summary

Core Content

The OC&C Christmas Trading Index 2008 provides an overview of the UK retail sector's performance during the festive season. Despite economic challenges, the Christmas period was not as disastrous as feared, with many retailers managing to avoid significant declines. The index highlights both the strengths and weaknesses of various sectors and retailers, emphasizing the impact of discounting, consumer behavior, and the importance of a multichannel approach.

Main Points

• Overall Performance: Christmas trading was slightly better than expected, with like-for-like sales down 3.3% according to the BRC's retail sales monitor. However, it did not fall off a cliff, indicating that consumers still had money to spend and were willing to buy gifts.

• Online Retailers: Online sales performed well, with several retailers showing strong growth. However, growth has slowed compared to the previous year, with a 14.2% increase in December 2008 versus over 50% the year before.

• Value-Driven Consumers: Retailers that communicated a strong value message, such as Primark, Matalan, and Morrisons, saw improved sales. In contrast, Marks & Spencer's food division suffered a 5.2% decline due to its reputation for high prices.

• Supermarkets: Supermarkets generally performed better, with Tesco leading the way. The grocers' non-food offerings contributed to their success, and inflation also played a role in supporting sales.

• Middle Market Struggles: The middle market faced significant challenges, with retailers like M&S and Next struggling to maintain growth. However, some managed to maintain profitability through effective margin management.

• Younger Shoppers: Younger consumers were more willing to spend, contributing to the success of retailers like New Look, JD Sports, and Asos. Parents, on the other hand, were more cautious with their spending.

• Store Closures and Period Variability: Store closures and varying reporting periods affected the results. For example, Jessops showed positive growth despite previous issues, which may be attributed to store rationalization.

• Multichannel Importance: The index underscores the importance of a strong multichannel presence, as online and in-store performance varied significantly.

Key Retailers and Their Performance

Online Retailers

• Asos: +118% sales growth
• Shop Direct (Online only): +44% sales growth
• N Brown (Online only): +34% sales growth
• Ocado: +25% sales growth
• Play.com: +24% sales growth
• Tesco (Online and Tesco Direct): +18% sales growth

Store-Based Retailers

• Peacocks: +22% like-for-like sales
• BrightHouse: +13.5% like-for-like sales
• JD Sports (Fashion fascias): +12.5% like-for-like sales
• Pets at Home: +10.4% like-for-like sales
• Game Group: +10.0% like-for-like sales
• Matalan: +5.9% like-for-like sales
• New Look: +2.8% like-for-like sales
• Mothercare Group: +11% like-for-like sales

Retailers with Declines

• Comet (Kesa): -2.5% like-for-like sales
• Majestic Wine: -2.9% like-for-like sales
• Burberry Group (Retail): -3% like-for-like sales
• Marks & Spencer (Food): -5.2% like-for-like sales
• Marks & Spencer (All categories): -7.1% like-for-like sales
• Next Retail (Next): -7.0% like-for-like sales
• Argos (Home Retail Group): -7.5% like-for-like sales
• Currys (DSG International): -12% like-for-like sales
• PC World (DSG International): -13% like-for-like sales
• Theo Fennell: -21% like-for-like sales

Conclusion

The 2008 Christmas season was a mixed bag for the retail sector, with some retailers thriving due to effective value messaging and discounting strategies, while others struggled due to economic constraints and changing consumer habits. The importance of a multichannel presence and the ability to adapt to market conditions were highlighted as crucial for success. Despite the challenges, the season was not as bad as feared, and retailers can take some solace in the fact that the market may be even tougher in the upcoming year.