Five things we learned from UK retailers’ Christmas updates

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By James Davey

LONDON (Reuters) – Some of the biggest names in British retail have released Christmas business updates over the past few days. What have we learned from the ad flood?

1) CHRISTMAS WAS MORE MERRY THAN EXPECTED

Expectations in the run up to Christmas were not high as the supply chain crisis meant stock levels were lower than expected in some areas such as clothing.

In this case, sales proved to be quite robust, which testifies to the strength of consumer demand with purchasing power boosted by the lack of alternatives.

Supermarket groups, such as market leader Tesco and Sainsbury’s, saw sales rise as more customers avoided bars and restaurants due to the Omicron variant of coronavirus and instead celebrated at home.

The British also indulged themselves with champagne and other more expensive foods.

2) BRITISH BRAVE THE SUPERMARKET AISLES

According to market researcher Kantar, December saw the highest number of in-store supermarket visits since March 202O, with consumers appearing to be more confident about store visits despite rising numbers of COVID-19 cases.

Conversely, online grocery sales fell 3.7% in December compared to 2020 and accounted for 12.2% of sales, compared to a peak of more than 15% in February.

Some of the cost benefits of having a physical as well as online presence have also emerged, with clothing retailer Next, for example, handling product returns online in its stores.

3) FINALLY! THE MARKS & SPENCER REVIVAL APPEARS REAL

After more than a decade of false dawns, investors are beginning to believe that one of Britain’s most elusive retail recoveries may finally materialize.

Another strong trade update from the 138-year-old food and clothing retailer, still one of the biggest names in British commerce, showed the improvement in trade in the first half of last year was no not a flash in the pan.

M&S, which has a partnership with online retailer Ocado, is now Britain’s fastest-growing food retailer, while full-price clothing sales have been strong, boosting its profit margins.

By contrast, online fast fashion retailers ASOS and Boohoo are struggling to grow and their combined market capitalization is now lower than that of M&S.

4) TRACKSUITS AND SPORTS SHOES ON REQUEST

Brits may not be the fittest, but they love a tracksuit and a pair of trainers, as evidenced by the phenomenal growth of JD Sports Fashion, which has generated a market capitalization of over £10 billion (13 .7 billion dollars).

A business update showing 10% sales growth and a major update to its earnings outlook means the group is now challenging Next as Britain’s most profitable clothing retailer.

She exported the formula with brands such as Finish Line and Shoe Palace in the United States.

5) HOLD ON, 2022 COULD BE A BUMPY YEAR

As Christmas trade beat expectations, retailers warned that 2022 is shaping up to be a tough year shaped by the specter of inflation.

It’s a global problem, with Japanese clothing retailer Uniqlo warning it will have to raise prices for some products due to rising raw material and shipping costs.

UK consumers are facing a cost of living crisis due to rapidly rising inflation, rising energy bills and tax hikes, leaving retailers already struggling labor shortages and rising transportation and logistics costs, facing a tougher business environment.

Retailers could also be impacted by consumers shifting spending to overseas vacations and other leisure attractions as COVID-19 restrictions ease.

($1 = 0.7288 pounds)

(Reporting by James Davey; Editing by Keith Weir and Frank Jack Daniel)

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