Well, the shocking news from the high street is that some retailers did well and some didn’t do so well. A little bit more trade has migrated to the internet, although much of this is still with the traditional retailers. Hardly shocking news. Every year some retailers do well and some don’t. What is interesting and encouraging is that more are doing well than doing badly. The news is a hell of a lot better than it was in Christmas 2008 when retailers seemed to be folding every day.
Who are the winners?
It’s not news that John Lewis can’t do a thing wrong these days, and that Next is storming. Aldi and Lidl are no longer seen as a continental Kwik Save (remember them) and have now become the Primark of the food industry. I will only touch on these for now as this is very old news.
The thing about John Lewis is that not only are they very good at what they do — we trust them. And, with good reason. You know if you buy something from them and there is a problem it will be dealt with. You know that they are only going to buy decent stuff and that their brand is not that much far behind Harvey Nichols when it comes to cachet. It appears that Aldi and Lidl have come of age in this country and, with the squeeze still being felt on earnings, they are bound to cash in. Next bought better stock than their rivals this year.
So what has gone wrong with the others?
Tesco customers are mostly price conscious and, if the discounters are improving, then it is bound to eat into their profits. True also of Morrisons, whose figures are perhaps the most worrying. Debenhams is undergoing major changes and, if you haven’t seen it already, you should take a look at the new Oxford Street store.
What about M&S?
To be frank I cannot see what the fuss is about with M&S. Its food sales go from strength to strength and clothing is flat. Yes, of course the company and its investors would have liked to have seen a healthy increase. This is not, however, the doomsday scenario.
Clothing suffered because this year Next and John Lewis bit a lump out of M&S’s market share. In 1998 when M&S first fell from grace, the finance director of a competing retailer told me to go out and buy M&S shares. Surprised, I asked, “Why?” He said, “because as much as we like to gloat over M&S losing its crown [it was then the most profitable retailer in the UK], they are not stupid people and they have the money to put it right.” I didn’t buy the shares and the following year M&S was a darling of the stock exchange.
I must stress that I am not qualified to advise on what shares you should buy. But it is fair to say that M&S are still clever people and they are not exactly short of cash. There is no doubt that people much cleverer than I are now ensconced in M&S HQ working out how to win that share back. We should wish them well.
What is really going on?
This is competition working well; for as hard as M&S will work to win back that market share, Next will be fighting hard to keep it. The winners will be the consumers, for both businesses will be providing better product and service as a result.
We should congratulate Aldi and Lidl for stellar performance but I am sure they are in no doubt that Tesco will be plotting to win that business back. Again, it is the customers of both who will benefit.
Peter Burgess is Managing Director of Retail Human Resources plc, the UK's leading retail recruitment consultancy.
I agree with Peter's comments and having just returned from the West End it is clear that in London business is booming. The offer available to consumers is better than it has ever been and long may this continue.