Ranking: Christmas trading 2023 league table

Christmas trading analysis − lessons for 2024

The picture for Christmas 2023, based on results so far, is a mixed bag. 

Several retailers posted “best ever” sales and there was a sense for many that, as Next quoted in its results, the consumer environment was “more benign than it has been for a number of years”. 

However, as the latest BRC-KPMG retail sales monitor shows, UK retail sales slowed in December 2023 – increasing only 1.7%, against a rise of 6.9% in December 2022. The BRC said weak consumer confidence impacted spending, which was similar reasoning given by JD Sports after it issued a profit warning with trading failing to meet its expectations.  

Retail Week takes a closer look at the latest insights to understand what retailers can learn from Christmas 2023. 

Winning categories 

Retail Week’s survey of 1,000 UK consumers on October 23, 2023, forecast grocery shopping would dominate consumers’ Christmas spending. This finding was correct. Supermarkets had their busiest Christmas since 2019 with a record £13.7bn of sales made by UK grocers over the four weeks to December 24, according to the latest Kantar data. Online supermarket purchases also grew ahead of the market during the period, up 7.5% on 2022.  

While Kantar data shows Tesco retained its stronghold with the highest market share over the period (27.6%), Sainsbury’s’ performance is notable as it recorded its highest market share since December 2020 at 15.8%, while sales jumped 9.3%.  

Lidl, while only occupying 7.7% market share, enjoyed stellar trading performance – ranked at the top of our league table as of January 9 – with a 12% increase in like-for-like sales for the four weeks to December 24, 2023. Factors that contributed to this success were the popularity of own-brand premium label Deluxe, which saw sales increase by 11%, and a surge in new customers; 4.5 million more customers came through its doors in December. Consumer demand for discounters over Christmas is also evidenced by the performance of B&M, which saw a 5.0% increase in like-for-like sales in the 13 weeks to December 23, compared to 2022. 

Gifting categories, such as jewellery and beauty, appear to have been popular among Christmas shoppers, as highlighted by the sales performance of retailers Pandora and Bodycare. With a 9.0% increase in like-for-like sales from 2022 to 2023, Pandora’s Christmas trading exceeded its expectations with the jewellery business crediting continued “brand momentum”. For health and beauty retailer Bodycare, which reported a like-for-like sales increase of 8.2% in December 2023, increasing its product margins and investing in stores supported growth. 

As for fashion trading, it was a tale of two halves for behemoths Next and JD Sports. Next reported trading “ahead of expectations” with like-for-likes up 5.7%; £38m “better” than its previous guidance of a 2% sales increase. As a result, Next upped its full-year profit guidance before tax by £20m to £905m.  

JD Sports, while not featured in our league table due to the difference in comparison data, reported results “slightly behind expectations” with 1.8% like-for-like growth for the 22 weeks to December 30. It said it believed this was due to “milder weather” and trading that had been more promotional than expected due to “cautious consumer spending.” It issued a profit warning a result. Profit before tax for the full year to February 2024 is now expected to be between £915m and £935m, down from the previous guidance of £1.04bn. 

The investments that helped retailers win  

The retailers topping the Christmas league table made several investments to ready themselves and meet consumer demand. From investing in their supply chain and implementing AI through to engaging staff. 

Service improvements: For Next’s golden quarter, online sales were up 9.1%, while they increased 7.7% during the second half of the year, which the retailer credited to service improvements when compared with 2022. In the first half of 2023, Next reported that it had made new improvements to availability, speed of delivery and reliability at its online arm, through initiatives such as the opening of a new warehouse. 

AI implementation: Next has also been leveraging AI technology to improve efficiency in its online operations; namely to analyse sales history and forecast what product volumes it needs, which will have served it well over Christmas 2023.  

Microsoft general manager, retailer and consumer goods industry, Olaf Akkerman believes AI transformation will enable far more retailers to unlock growth in the year ahead, provided it is invested into properly: “A key takeaway for retailers and consumer packaged goods brands about AI is that deploying it as a business-led, transformation project, rather than just another technology project, appears to significantly increase their rates of success – and the degree to which they can optimise costs and generate new revenue. 

“This is partly because AI, like data, is only valuable if staff do something useful with it. We are hearing from our retail customers that they get more value out of AI when they avoid spending too long focusing on all the things AI can do in theory and prioritise what their business needs in practice – and move from experimentation to pilot to production, as quickly as possible.” 

“We are typically seeing retail business leaders approach AI by focusing first on cost reduction opportunities that require lower upfront investment yet have a significant impact internally and huge potential to scale. This builds confidence in the technology that can be translated into pursuing more direct-to-consumer AI opportunities, such as personalising elements of the customer experience, including loyalty programmes.” 

Focus on staff: Majestic Wine toasted to its “best ever Christmas” with like-for-like sales up 8.1%. Chief executive John Colley said the result would not have been possible without “monumental effort” from “colleagues across our stores, commercial teams, distribution network and support centre”.  

In September, Majestic launched its biggest festive recruitment drive – hiring 200 new staff to add to its 1,400-strong workforce. It followed the wine specialist’s largest-ever investment in staff pay, in April, whenit took its basic rate for store staff to at least £10.60 an hour. 

Store expansion: Majestic also said the opening of six new stores in 2023 helped it to serve 63,000 new customers in the eight weeks to December 24. It was not the only retailer driving Christmas trading from store growth. Mamas & Papas is an example of a retailer that saw its store investments pay off this Christmas. With like for likes up 7.0% in the 13 weeks to December 31, the nursery and babycare retailer said sales growth in its expanding store estate and concessions in the likes of Next and M&S were “better than expected”. 

Optimising online UX: While sales of big-ticket items are not typically expected to perform well over Christmas, the results of premium homeware retailer The Cotswold Company make for interesting reading. 

Its like-for-like sales increased 10.5% in the nine weeks to December 31, with online investments in particular driving ROI. Online, which accounts for 80% of the business’ sales, the bounce rate reduced 9% and conversions increased 3%. Chief executive Ralph Tucker said factors such as optimising the online user experience and its delivery service, have been “driving conversions and customer engagement”. 

For the majority of the retailers topping our Christmas league table, great online UX has been paramount. Rithum managing director EMEA, Philip Hall, believes that “what makes these leaders stand out is their laser-focused attention to detail when managing online sales across multiple channels, combined with great technology to ensure efficiency across the buying journey. It’s great to see a strong online performance from many Rithum customers in the league table.”

Price cuts: While not all retailers, particularly those in fashion, were able to run discounts and price cuts to appeal to shoppers due to tight margins, Aldi saw sales fly as a result. With like for likes up 8.0% for the four weeks to December 24, the discounter reported sales of more than £1.5bn for the “first time” in the run-up to Christmas. The grocer said more households than ever before shopped with it over the period searching for lower prices. As a result, Aldi has pledged to make further price cuts in 2024. 

Promotions around Christmas played a crucial role. For instance, Hall says its retail clients traded better than forecast due to discounting: “While inflation is coming down, household budgets are still being squeezed and consumers remain price conscious. We work with many of the world’s leading brands and saw more aggressive promotions during Cyber Five (the period from Black Friday to Cyber Monday) and the run-up to Christmas than last year.”

“With customers looking for deals to make budgets stretch further, these promotions drove better-than-expected sales. In fact, we saw strong GMV growth (19% year on year) from Rithum customers in the UK across the cyber five period, despite muted forecasts.”

In-store vs online  

The latest MRI Software data shows retail store footfall was 6.1% higher in December 2023 than in November 2023. Year on year, footfall rose marginally by 0.2% across UK retail destinations, mainly driven by a rise of 1.2% on high streets. 

While market data is yet to published relating to online sales in December, many of the retailers topping the league table boasted strong ecommerce trading, such as Next, while Bodycare has said it will be launching a new ecommerce platform to capitalise on its growing customer base.

Online traffic analysis specialist Similarweb has reported on the busiest retail websites in the UK in December. It found that, in the week running up to Christmas Eve (December 18-24), the five busiest websites were Amazon.co.uk with 78.2 million visits, eBay.co.uk with 43 million, Argos.co.uk with 12.8 million, Next.co.uk with 10.6 million, and Etsy.com with 9.7 million. Despite not having a transactional ecommerce website, Aldi.co.uk was the 44th busiest website over the week preceding Christmas with 2.1 million page visits, possibly linked to customers browsing for grocery and product inspiration ahead of their in-store shop.