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The winners and losers in retail of 2017

2017 was an unsteady year for the retail sector, with annual retail sales growth at its lowest in four years. According to the ONS Retail Sales December 2017 bulletin, quarter one saw a 1.2% decline in sales. This did however pick up in quarter four by 0.4% – but this remains the weakest quarterly growth of the year. Taking the festive period in to consideration, a weak increase in sales is somewhat unusual. In fact, the British high street suffered the worst Christmas sales growth in 5 years, due to rising inflation, uncertainty on economic outlook and a 1.5% decrease in sales as consumers bring forward their festive shopping to Black Friday.

 

So in this year of rapid decline, who came out on top and who deteriorated?

With goods prices increasing 3.3% compared to 2016, supermarkets, food retailers, department stores and petrol stations saw the greatest decline in sales. Fashion retailers, however saw a significant 7% growth in sales towards autumn of 2017. (The Guardian) Retailers with a strong online presence also fared well over the past year, with consumers boycotting the high street in search for a better deal.

WINNERS:

SUPERMARKETS:

Tesco

The largest supermarket chain in the UK proves to be a winner with a like for like sales growth of 2.3% in quarter 3 of 2017, in the UK and ROI. Chief Executive, David Lewis comments, “we have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years. Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK.”

Sainsburys

Sainsburys also reported record sales growth for 2017, with a 2.3% increase for in-store grocery sales and an 8.2% growth for online grocery sales towards the end of the year.

Morrisons

In the backend of 2017, Morrisons saw a like for like sales increase of 2.8%, with total sales increasing 2.6% excluding fuel. Their online sales also saw a surge of 10%. Chief Executive, David Potts states “our plans to become a broader and stronger business are progressing well, with another period of positive like-for-like sales and the start of the rolling programme to supply McColl’s.”

FASHION RETAILERS:

Boohoo

Following the acquisition of fellow ecommerce fashion retailers Pretty Little Thing and Nasty Gal, Boohoo saw a group revenue growth of 107% in the UK alone. Although its individual sales increase wasn’t as high as expected at 25%, Pretty Little Thing more than made up for this with a 191% revenue increase of £73.8 million. Nasty Girl also saw a revenue of £11.9 million since the start-up in March of 2017.

Next

By the end of 2017, Next had seen an increase of 1.5% on full price sales compared to the previous year. Although in-store sales were actually down for the full year by 7.2%, a surge in online sales of 10.4%  brought the overall figure back up.

DEPARTMENT STORES:

John Lewis

Gross sales at the John Lewis Partnership were up 2.5% overall, with Waitrose sales, excluding fuel, increasing by 1.4% compared to last year and 1.5% on a like-for-like basis. John Lewis were also up 3.6% compared to the previous year and 3.1% like-for-like.

CHARITY:

Oxfam

Over the eight week Christmas period of 2017, Oxfam’s total retail sales reached £16.9 million, an increase of 1.2% compared to the previous year. Thanks to vintage and designer clothing from the likes of Burberry, Barbour and Gucci and a series of first edition books, the online shop was responsible for 5.4% of total sales.

LOSERS:

SUPERMARKETS:

Marks & Spencer

M&S had a difficult year, both food and clothing sales struggled with a 1.4% decrease in overall like for like sales. Chief Executive, Steve Rowe said “M&S had a mixed quarter [in quarter three] with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our Food like-for-like sales.”

FASHION RETAILERS:

Signet Jewellers

Signet Jewellers performance was also below par, with a 5.3% decline in same store sales towards the end of 2017. Sales at it’s H.Samuel and Ernest Jones UK chains dropped more than 10% also.

DEPARTMENT STORES:

House of Fraser

It appears that House of Fraser was one of many victims to the upsurgence of Black Friday shoppers. During the event, in-store sales increased 0.8%, however fell back by 2.9% at the end of the year. Online sales were also down by 7.5%.

Debenhams

At Debenhams, group like for like sales took a 1.3% decline towards the end of 2017, especially over the christmas period despite their efforts of significant discounting on seasonal products. Chief Executive, Sergio Butcher said, “the market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance.”

OTHER:

Mother Care

In the UK, like-for-like sales declined by 7.2%, and online sales declined by 6.9%. With the closure of many stores across the UK, this decrease in sales wasn’t a surprise for Mothercare Plc.

 

With wage growth stuck at 2.2% and the consumer prices index measure of inflation at 3%, it comes with little surprise that the high street spending of 2017 was at a 4 year low. So, what can we expect to see for 2018?

 

Looking at the results from a particularly bad year in 2017, the retail industry is set to flatline in 2018, with the number of shops across the UK expected to fall by 22% from 281,930 to 220,000 (The Telegraph). With ecommerce retailers taking over with competitive pricing and ease of shopping experience, we are sure to see the continued decline of brick-and-mortar retailers.

 

At AlphaGraphics, we specialise in helping retail businesses plan and implement end-to-end tailored marketing campaigns to improve lead generation and beat sales lulls. To find out more, visit: https://retail.agnortheast.com/

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