Comment: Who won the Christmas battle on the high street?

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This week has been an eventful week for UK retail. Despite weak overall figures from the BRC there have been some clear winners and losers over the Christmas period.

It has been an eventful week for UK retail. Despite weak overall figures from the BRC there have been some clear winners and losers over the Christmas period.

Although much will be made of the Tesco bounce back it must be remembered that the recent growth figures will be flattered by poor sales last year. Tesco also saw market shares continue to decline from 30.6% to 30.5% according to Kantar figures, although this represents a slowdown in loss of share, which could be considered a victory of sorts.

Conversely Sainsbury’s, which registered much slower like-for-like growth and undershot expectations, saw their market share grow due to store openings, particularly in the burgeoning convenience channel. Despite mixed reviews of its seasonal performance, the retailer delivered a 32^nd consecutive quarter of sales growth, albeit at the lowest level for 31 of those quarters.

Interestingly, much of Tesco’s comeback is being attributed to more basic retail strategies like couponing and their underlying growth in online sales, rather than the £1bn facelift and charm offensive that has underpinned Philip Clarke’s turnaround strategy. It may be too soon to tell, but in these austere times consumers could be responding better to discounting than to “brighter stores”.

With Morrison’s results also disappointing thanks to a slow take up of convenience and online channels, the clear winners over the festive shopping period reflect a continued polarisation of consumer habits. This is especially true at Christmas when trading up to premium goods is common, offset this year by a more austere context which encouraged discount “top up” shopping. Waitrose certainly benefited from this success with like-for-like growth of over 5%, eclipsing that of mid-market retailers. Additionally discounters such as Aldi, Lidl and Iceland have also been clear winners offering relatively good quality seasonal produce based on distinctly limited stock lines. Aldi saw Christmas sales rise by over 30% while Lidl and Iceland saw growth hovering around the double digit mark.

The continued disappointing performance of Marks and Spencer despite the opportunities to tap into these polarised habits will continue to raise doubts about the retailer’s strategy into 2013. This is a factor not helped by the manner in which Christmas figures were released, wiping over one-quarter of a billion pounds of the retailer’s stock value. Although food sales for M&S continued to grow, a 3.8% fall in general merchandise sales offset this reflecting a mid-market apparel brand that is being squeezed from both sides and undermined by pure play firms like Asos.

Problems at M&S pale in comparison to those of Jessops, which is set to become the first high street casualty of 2013. Weak consumer sentiment will only have compounded the structural challenges faced by Jessops. Price competition from online channels created a retail landscape that is unable to support a chain of nearly 200 camera shops. Equally, digital cameras are being increasingly sidelined by cameras on smartphone or tablet devices, redefining the market into a niche, quality driven, area that lacks the mass appeal of a high street chain.