During the last two weeks the major retailers have announced the results of their Christmas trading. Both the headline figures and the underlying commentary reveal a great deal about the current consumer mood. It is particularly striking that the figures reflect consumer trends that we have been observing and reporting for several years now.
Much has been written in the business press about the winners and losers of Christmas 2017. And, of course, the massive differentials in performance reported by the different retailers will, to some extent, reflect the good or bad judgement of individual retailers in their decision making around product ranges and pricing.
However, the divergence in performance of different retailers and different categories almost certainly reflects the polarisation and fragmentation trends that we have talked about in recent times. Grocery spending outperformed other categories, for example. Within grocery, discounters Aldi and Lidl did particularly well (with Kantar Worldpanel suggesting both increased sales by 16.8% in the three months to 31 December). At the same time, Waitrose reported a growth of 1.5% in like for like sales over the 6 weeks to 30th December. The performance of Morrisons was also strong, with sales growth of 2.8% in the 10 weeks to 7th January. However, the performance of different parts of Morrisons was particularly revealing. Sales of heavily discounted vegetables were strong, but sales if its premium ‘The Best’ range soared by 25%. Here we see polarised and fragmented sales performance across retail sectors, within a single sector such as grocery and, in the case of Morrisons, we see fragmented performance within a single retailer’s product range.
This reflects the widely divergent economic experiences of different parts of the UK, and the divergent experiences of different employment sectors. It seems wholly fitting that an economically fragmented UK should see massive growth in sales to discounters, whilst also seeing a premium retailer like Waitrose do well.
The more detailed commentaries on these results are also revealing. For example, most retailers had to make a judgement about whether to hold their nerve on prices and engage in pre-Christmas discounting. This was a high stakes, cat and mouse game between retailers looking to maintain margin and savvy consumers leaving it late to do their Christmas shopping in the hope of securing a great deal. The fact that Christmas day fell on a Monday may have had some influence here, but the Friday before Christmas was the busiest ever grocery shopping day ever recorded by Kantar. Again, this reflects the desire for deals and discounts that has been a feature of much of our work around the new consumer morality.
We normally use these posts for looking forward and making forecasts. I hope it has not been too self-congratulatory to use this post to look back to see how trends and forecasting predictions come to life in real world consumer behaviour sometimes, especially as the forecasting art has received a bit of a battering in many parts of the media in recent times.