The middle ground of food retailing – dominated by Tesco, Asda, Sainsbury’s and Morrisons – is being attacked from below by discounters such as Aldi and Lidl and from above by more upmarket Waitrose.
Waitrose, walking with the gentry but increasingly with the common touch, revealed yesterday that its like-for-like sales rose by more than 3 per cent in the latest trading quarter, while the Co-operative grocery operation, at the more value end of the market, saw sales rise 1 per cent.
The market shares of the “big four” are therefore under threat, but on the evidence of its Christmas trading quarter yesterday, Sainsbury’s has the strongest ramparts to fend off the usurpers.
Justin King’s group delivered the 36th consecutive quarter of same-floorspace sales growth – admittedly only 0.2 per cent – just as many in the City had been prepared for the first actual sales dip at Sainsbury’s during his tenure.
But it is still impressive, particularly as achieved against two disparate consumer backcloths: pre-2008 credit-fuelled boom and now austerity Britain. Sainsbury’s has become a Brand for All Seasons.
As has become par for the course in the supermarket sector, the best growth was in its online and convenience stores: 10 per cent and 18 per cent respectively.
It will be interesting to see what market leader, Tesco, which reports today, comes up with. But it’s fair to say the market is not holding its breath for any signal improvement in performance as chief executive Phil Clarke tries to turn the food retailing supertanker around after what is now a significant period of lacklustre trading.
Elsewhere in the retail sector, the general picture that is emerging from Christmas trading is that success seems geared to individual retailers rather than determined by the relevant sub-sectors.
So while Sainsbury’s. Waitrose, the discounters and the Co-op have prospered it is thought Tesco and Morrisons will disappoint.
Debenhams had a horrible Christmas period, leading to the ejection of its finance director. But good trading performances from John Lewis and House of Fraser (including strong online) show it is not just being in the department store sector that has laid Debenhams low. It is Debenhams–specific.
Mothercare put out a profits warning yesterday, while, perhaps unsurprisingly, Majestic Wine has done well in the festive period.
Fashion retailer Next went gangbusters (also strong online), but the City is braced for relatively lacklustre news on clothes from Marks & Spencer today.
Inference? Retailers with a smooth online offer are doing best. But overall performance is governed by the performance of individual managements and product offerings. In other words, there is no hiding place for executives in the general high street headwinds.
Sterling performance is revving up for 2014
IT’S predictable that currency markets expect sterling to make solid gains against the euro in 2014. The UK economic recovery looks to be moving from second to third gear while the eurozone car is still sputtering along, with a broken headlight, even if the worst of the fiscal crisis across the Channel is in the rear view mirror.
The markets think interest rates will rise in the UK before they do over there. Difficult to disagree.