Shopper footfall declines as grocery yet again emerges as the sector winner over the festive period
December saw footfall decline by 5% across the UK compared to the same period in 2022 (according to the British Retail Consortium and Sensormatic) with shopping centres being the hardest hit measuring a decline of 7.4% and faring worse than high streets (down 4.2%) and retail parks (down 4.8%). But there was some good news for Edinburgh and Central London - where footfall rose by 6.4 % and 10.6% respectively. Wet weather and shoppers opting to shop online will have been key contributors.
Christmas trading results so far, indicate that the grocery sector was, yet again, the winner in terms of increased sales during the busy festive season. Sainsburys announced it saw sales increase by 8.6% over the six-week festive period whilst also achieving its highest market share (15.8%) since December 2020. Tesco saw like-for like (lfl) sales rise by 6.8% causing it to up its profit forecast for a second time this financial year (from £2.6bn - £2.7bn). The German discounters announced strong December trading results with Lidl reporting that its sales over the period had increased by 12% year on year, whilst Aldi saw an 8% rise. Grocery was also a driver of Marks & Spencer’s ‘better-then-expected’ 8.1% rise in lfl sales for the final quarter of the year – lfl grocery sales grew by 9.9% compared to the same period last year.
Fashion was one of the losers over the period with December sales falling by 6.1% compared to the same month in 2022, according to BDO. Despite this there were still some strong performers within the sector. Marks & Spencer said that lfl sales for clothing and home increased by 4.8% (to £1.2bn) driven by strong performance in womenswear. Once again, Next posted better results than it had expected -in the nine weeks to 30 December full price sales rose by 5.7% year-on-year compared to the 2% growth it originally forecast. One of the most surprising results was the performance of JD Sports – usually one of the top performing retailers in the UK. It announced a cut in its profit forecast (from £1.04 billion down to between £915 - £935 billion) following underwhelming Christmas results blaming the mild weather and heavy discounting.
Discount retail B&M reported positive trading figures in the 14 week period to 30 December 2023, with lfl sales growth of 1.2%.
High Street bakery, Greggs had a strong trading period and reported a 9.4% increase in lfl sales in the final quarter to December 30 attributing some of this to strong demand for its seasonal products. It also announced ambitious expansion plans in 2024 to open between 140 - 160 new stores in 2024.
There were also online retailers who performed strongly including fashion retailer Sosander (which will open its first physical store this year) which announced a ‘record quarter of trading’ in the three months to 31 December when revenue surged by 23%, compared to the same period in 2022, to £14.3 million. Very said that sales had increased by 2.1% in the seven week run up to Christmas, with strong performances in electricals, toys and beauty.
Overall, the results have proven mainly positive, particularly for some of the UK’s biggest retailers, against the backdrop of the cost-of-living crisis and negative sentiment towards the retail sector. As ever, 2024 will present challenges to retailers (e.g. the current risk around supply chain problems driven by blocked shipping canals in the Red Sea which Next have already warned about and increased operating costs), and shopping destinations as investors navigate everchanging consumer shopping habits but the sector will continue to address these challenges head-on with many retailers showing resilience yet again in what is a difficult trading environment. Investors need to think carefully about what is needed to create vibrant and thriving retail destinations that will bring footfall back in to cities and towns.
Hear more from our shopping centre team here: https://bit.ly/3Hl7c50
Christmas trading results so far, indicate that the grocery sector was, yet again, the winner in terms of increased sales during the busy festive season. Sainsburys announced it saw sales increase by 8.6% over the six-week festive period whilst also achieving its highest market share (15.8%) since December 2020. Tesco saw like-for like (lfl) sales rise by 6.8% causing it to up its profit forecast for a second time this financial year (from £2.6bn - £2.7bn). The German discounters announced strong December trading results with Lidl reporting that its sales over the period had increased by 12% year on year, whilst Aldi saw an 8% rise. Grocery was also a driver of Marks & Spencer’s ‘better-then-expected’ 8.1% rise in lfl sales for the final quarter of the year – lfl grocery sales grew by 9.9% compared to the same period last year.
Fashion was one of the losers over the period with December sales falling by 6.1% compared to the same month in 2022, according to BDO. Despite this there were still some strong performers within the sector. Marks & Spencer said that lfl sales for clothing and home increased by 4.8% (to £1.2bn) driven by strong performance in womenswear. Once again, Next posted better results than it had expected -in the nine weeks to 30 December full price sales rose by 5.7% year-on-year compared to the 2% growth it originally forecast. One of the most surprising results was the performance of JD Sports – usually one of the top performing retailers in the UK. It announced a cut in its profit forecast (from £1.04 billion down to between £915 - £935 billion) following underwhelming Christmas results blaming the mild weather and heavy discounting.
Discount retail B&M reported positive trading figures in the 14 week period to 30 December 2023, with lfl sales growth of 1.2%.
High Street bakery, Greggs had a strong trading period and reported a 9.4% increase in lfl sales in the final quarter to December 30 attributing some of this to strong demand for its seasonal products. It also announced ambitious expansion plans in 2024 to open between 140 - 160 new stores in 2024.
There were also online retailers who performed strongly including fashion retailer Sosander (which will open its first physical store this year) which announced a ‘record quarter of trading’ in the three months to 31 December when revenue surged by 23%, compared to the same period in 2022, to £14.3 million. Very said that sales had increased by 2.1% in the seven week run up to Christmas, with strong performances in electricals, toys and beauty.
Overall, the results have proven mainly positive, particularly for some of the UK’s biggest retailers, against the backdrop of the cost-of-living crisis and negative sentiment towards the retail sector. As ever, 2024 will present challenges to retailers (e.g. the current risk around supply chain problems driven by blocked shipping canals in the Red Sea which Next have already warned about and increased operating costs), and shopping destinations as investors navigate everchanging consumer shopping habits but the sector will continue to address these challenges head-on with many retailers showing resilience yet again in what is a difficult trading environment. Investors need to think carefully about what is needed to create vibrant and thriving retail destinations that will bring footfall back in to cities and towns.
Hear more from our shopping centre team here: https://bit.ly/3Hl7c50
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