IF CONSUMERS are leading the recovery, then someone should tell three of our biggest retailers that they have work to do.
Marks & Spencer, Morrisons and Tesco produced results described by analysts as dire, although in the case of M&S the criticism may be a little harsh.
Trading at M&S was only up because of strong food sales, while sales fell at the two supermarket groups. Each has a particular reason – or excuse – but there is a growing view that they have simply got caught in the squeezed middle as shoppers opt for either the top end or the discounters.
In the case of the department stores, M&S and Debenhams have been sacrificed for Next, Zara and John Lewis. The supermarket war appears to have been won by Waitrose and Sainsbury’s in the premium bracket while Aldi and Lidl have mopped up the bargain shoppers.
Once again questions are being asked of M&S boss Marc Bolland, who continues to blame the unseasonal weather for hitting sales of the chain’s important autumn/winter range, while failing to acknowledge that Next and John Lewis enjoyed good figures – and the same weather.
For M&S, the problem is not so much that the product range is poor – its latest collection was well-received – but that it may be pitching it at the wrong group of consumers. Its core market is still in the over-50s age group and it is these people who are buying the clothes that are primarily aimed at the young while the younger consumers are choosing to go elsewhere.
Discounting was a big issue for all retailers, but they again split into two groups and it is notable that those which chose not to discount – Next and Ted Baker – have seen sales rise strongly, while those that joined the cost-cutting have simply forfeited more of their bottom line.
Next and Ted Baker called it right in believing the run-up to Christmas is a time when consumers are prepared to pay more.
Onlines sales are also coming increasingly to the fore and the winners are those that have worked out how to marry the virtual with bricks and mortar. Click and collect is now a feature of many retailers’ offerings, particularly those that are also using their stores as showrooms.
Among the supermarkets, Morrisons was late to the online and convenience format party and is paying the price with a profits warning. On top of that it has the oldest shoppers and yet is considering introducing babywear. Chief executive Dalton Philips has some hard thinking to do.
The good news is that more retailers are adapting to the combined online/high street model. M&S sales over the festive period actually grew overall and the shares ticked up. Food in particular remains a particularly strong feature and its online business grew 23 per cent.
But product and store mix may be exercising the minds of all the festive losers.
McEwan must hope no sticky end to RBS plan
THERe have been strong hints for some weeks that Royal Bank of Scotland chief executive Ross McEwan is planning further cutbacks and that this will involve more jobs being lost and branches closing.
Project Cook, as it is known, is named after the adventurer Captain James Cook, a nod to McEwan’s anti-podean roots. But perhaps he should bear in mind that Cook met a sticky end. He was stabbed in the back.