The December cold snap may have taken the shine off what was expected to have been a robust Christmas for general retailers, but their counterparts in the grocery segment appear to have taken the snowy weather in their stride, particularly those selling premium lines.
Figures from research group Nielsen suggest that shoppers braved the icy roads to stock up on Christmas fare, with total sales across multiple retailers up 6.9 per cent year on year in the four weeks to 25 December. The analysis supports earlier research from industry analyst IGD that shoppers would scale back present buying in favour of splashing out on Christmas dinner.
That partly explains why, despite the uncertain consumer environment, upmarket supermarkets were the big winners this year. Nielsen's figures put Sainsbury at the head of the majors and challenging Asda for the number two spot. That was confirmed by Sainsbury's own figures, which showed 6 per cent total sales growth and a 3.6 per cent underlying increase, helped along by the relaunch of its £1bn Taste the Difference range. Tesco has also said shoppers have traded up to its Finest ranges in recent weeks; Nielsen data suggests Tesco grew total sales at 6.9 per cent over Christmas.
And although food growth at Marks & Spencer was more subdued, at an underlying 1.8 per cent in its third quarter due to deeper promotional activity, it too enjoyed record trading, with single day sales topping £50m for the first time on 23 December.
Internet grocer Ocado - not covered by Nielsen's figures - also had a bumper Christmas. It said that gross sales in the four-week festive period had climbed 27.4 per cent, and would have been higher had it not reduced the number of delivery slots to improve its ability to deliver in the icy conditions. But, as Clive Black at Shore Capital points out, its full-year projected sales of £551m include a boost of around £30m from promotional vouchers, and competition for online shoppers is likely to intensify. Sainsbury is said to be growing its online business almost as quickly as Ocado, while Waitrose plans to extend its delivery offer into Ocado's London heartland, which means its market share projections could be too optimistic. Its shares remain a sell at 189p.
