A cracking Christmas for the Co-op’s food division: despite operating in what is arguably the UK’s most competitive sector, it managed to boost like-for-like sales by nearly 5% in the 12 weeks to January 2. After John Lewis and Sainsbury’s impressive figures last week, the Co-op’s results – and those of House of Fraser, which has just enjoyed its ‘biggest ever Christmas’ – show that it wasn’t just discount retailers cashing in this Christmas. But although December may have been an unexpectedly good month for the high street, its future prospects look rather more dubious…
In some ways, the Co-op’s continued success – this is its sixteenth consecutive quarter of sales growth – might seem a little surprising, since it’s operating in a sector with one dominant player (Tesco) and three larger rivals (Asda, Sainsbury and Morrisons), all of whom are growing aggressively. Admittedly a £200m promotional drive has helped pull in the punters, while the acquisition of Somerfield in 2008 – which has increased its store portfolio to 3,000 – has boosted its high street presence. But its success is also about branding: its ethical positioning is clearly going down well with shoppers, who bought 20% more of its ethically-reared turkeys this year, and 36% more Fairtrade wines.
So there are some things that we’re still prepared to shell out for. This new Age of Austerity that we keep hearing about was evident from today’s retail results – Poundland and budget clothing retailer Peacocks both enjoyed strong Christmas sales, while Primark is likely to tell a similar story later this week. But higher-end stores that got their offering right have also been able to thrive: look at House of Fraser, whose sales were up 7% on last year - and best of all, it shifted 33% more of its own-label lines, which should boost margins. A rare bit of good news for the Icelanders (who effectively own a large chunk of it, following the collapse of Baugur).
But does all this represent a return of confidence, or a short-term pre-Christmas binge? The British Retail Consortium’s money seems to be on the latter: it’s expected to report tomorrow that high street sales were up about 4% in December, but it reckons most retailers are in for a ‘very tough’ 2010 as tax hikes take a bite out of consumer confidence. And all this snow won’t help matters either (unless you’re someone like Blacks Leisure, which is unsurprisingly selling a lot more fleeces and thermal long johns). If the Co-op manages to make it to 20-odd consecutive quarters of growth, it’ll have done very well indeed.
In today's bulletin:
Co-op leads latest parade of high street winners
BAA battered as 150,000 passengers fail to fly
Editor's blog: Getting out of the Abbey habit
A Traveller's Tale: Predictions for the world in 2010
MT Expert's Ten Top Tips: Get more from your staff in 2010