Today in Retail Highlights: Christmas trading results

In this new blog series, Mintel reviews the latest retailer marketing and innovations, including new store openings, online developments, new concept or category launches. For this month’s highlight, our retail experts weigh in on four highlights from Britain’s retailers during the period leading up to Christmas 2023.

It remained a difficult market for the grocery sector with value high on the agenda, but it was also the sector which most directly benefited from the uptick in confidence in Q4 with across most retailers premium performing well.

Both Aldi and Lidl performed well, although growth did slow year-on-year due to spectacular growth in 2022 creating tough comparatives. Both highlighted their respective premium lines as being a driver of growth, with Lidl Deluxe sales up 11%. Tesco and Sainsbury’s also reported good results with again the work each has done on their respective premium lines driving growth with Finest up 16.7% and Taste the Difference up 13%. 

M&S had another sterling Christmas on the food side, building on a similar performance in 2022. While quality credentials of the brand clearly created the conditions for an expected trade-up from shoppers it is the continued work on entry-level lines that ensured consistent demand across the period, with Remarksable sales up 18% in the period.

Overall fashion demand in Q4 slowed with mixed weather in the autumn and winter creating widespread discounting, depressing value growth. The reported results shows a more mixed pattern, with leading high-street players, who notably don’t engage directly with Black Friday, posting figures which indicate outperformance of the market and others posting deep declines, both due to weak domestic and international demand.

At both Next and M&S it was online, and the investments and expansion of their platforms, which were a driver of growth. M&S noted year-on-year growth in full-price sales, reducing sale into stock by 6%, and overall clothing and home sales up 2.0% in-store and up 10.9% online. Retailer Primark also noted that the weather had impacted sales but festive lines and sportswear had helped the business to catch-up, with strong demand in December.

Global luxury demand remains tough, highlighted by Burberry’s results, with the business calling out weak UK demand as a result of lower inbound tourism and the impact of the lack of VAT shopping.

Household goods demand has suffered during the cost-of-living crisis, a result of very strong demand during the peak of the pandemic, a weak housing market and consumers naturally being cautious around big-ticket spending. This trend continued into the final months of the year, with all major categories reporting volume and value decline.

Individually there were some strong performances. Marks Electrical produced one of the highest growth figures of any retailer, albeit coming from a low base and across a wider period. Significant marketing and price investment in 2023 opened the business up to new shoppers, but pressure on margins – an area that the retailer has said it will look to bolster in 2024. 

The results from Currys were more reflective of the wider market, with a recovery in mobile demand offset by weaker trade in core electronics categories, such as TV and computing. Notably the retailer grew both its retail credit business, with adoption up to 20.6%, as well as its Care & Repair subscriptions both helped by being linked into Black Friday promotions.

Overall the health and beauty specialist sector was the star performer in Q4 in non-foods, reflecting generally more robust demand and continued demand for both low-ticket gifting and more opportunity for trading up than in 2022.

The numbers from Boots only run until November, but the retailer reported its biggest ever Black Friday driven by growth in both website and app engagement, with overall online sales up 19.2%. However in-store sales also saw growth attributed to Black Friday, up 7% over the Black Friday week itself. Beauty sales at the retailer were up 11.4%, with premium beauty a driver.

Across the full period it was a similar story for Superdrug with strong sales online, with sales via its app up 74%. The continued redevelopment of own-label paid dividends with overall own-brand sales up 10% and the recently launched Studio London now the retailer’s fastest growing and biggest own-brand range, with sales up 20% year-on-year. The retailer noted strong demand in cosmetics, fragrance and oral care with in-store services up 20%.

It was a mixed December for the retail sector. The overall picture was one of shoppers continuing to cut back, particularly on gifting and discretionary areas, but a polarized recovery in confidence ahead of December did give scope for some shoppers to be a little less cautious. Indeed 38% of consumers spent more than they had planned to for Christmas 2023.

January is always the low after a big spending period, and there was little change to this in 2024 with average weekly sales month-on-month down 24%. However, on many metrics January was better than we expected following a Christmas period where 25% spent more on credit than they usually would. 

For the first time in 24 months the grocery sector reported volume growth, albeit at +0.1% this was not a huge reversal of the trend. However, continued easing of inflation in this area, backed by retailer-backed price cuts across the sector is easing pressure on households.

The news of the UK economy having slipped into a technical recession is hardly the news to bring further confidence to retailers, the reality is most consumers have been acting in a recessionary way for much of the past two years. So overall these numbers for January fit the pattern of a continued very difficult market, but with small constant signs of demand moving in the right direction.

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