What do the Christmas retail figures tell us about the Future of Britain?

Away from the sensationalist headlines, the recent raft of retailer sales reports paint an interesting picture of life in Britain today. What’s most interesting, from our perspective, is how they reflect some of the shifts in consumer behaviour that we have been charting with our Future of Britain study.

Let’s start with the grocers. We have spoken a lot about the squeezed middle effect of the downturn: on one hand we are seeing the emergence of Aldi Nation, as consumers are increasingly willing to trade down at cheaper retailers to save money on the essentials, whilst at the same time trading up to ‘accessible treats’, offsetting those savings by splurging on a premium doughnut or nice bottle of wine.

Sales results from the grocers bear these trends out to a tee. At the accessible treat end, Waitrose saw robust sales growth of +3.1% and M&S saw food sales growth of +1.6%.  At the Aldi Nation end, both Lidl and Aldi are rumoured to have experienced double digit sales growth. And the squeezed middle?  Tesco sales down -2.3%, Morrison’s down -5.6% and Sainsbury’s ever so slightly up, with sales growth of +0.2%.

As we have charted over the course of our study, these emergent behaviours are not a temporary sticking plaster, they are ingrained in the consumer psyche and here for the long term. Any brand, grocer or otherwise, needs to fundamentally adjust or risk being alienated.

It is not just in the grocery sector that we see this fundamental change in consumer behaviour play itself out. Majestic Wine saw sales rise +2.8%, with Argentinian Malbec proving particularly popular with the recessionary British consumer and Dominos grew sales +11%. We’re dining out less and spending more time in the comfort of our home (surrounded by a plethora of entertainment technology) and so we’re happy to splash out on a nice bottle of plonk and an American Hot Double Decadence.

The shape of sales also illustrate how ingrained recessionary behaviour has become; our thirst for deals and value is now the new normal.  In a daring game of cat and mouse, consumers were willing to wait until the very last minute before making purchases, confident that retailers would fold and offer deep discounts. M&S had perhaps the most visible ‘fold’, with a 30% off mega sale event on the weekend before Christmas and Sainsbury’s had its biggest trading hour on December 23rd, when £17million went through its tills. Overall, aggressive discounting helped to push overall shop prices down by 0.8 per cent in December.

We are also beginning to see the consumer desire for convenience and online solutions eat into some retailers. It is no coincidence that the biggest grocer to see falls was Morrison’s, who launched their online offering this week, some 14 years after Tesco. Tesco itself is struggling in part because its 1990s fuelled out of town hypermarket strategy is not in line for consumers smaller top up shops; Sainsbury’s have cited convenience as a key growth driver.

So a winter of discontent for some retailers, a time for cheer for some bargain crazy consumers. Overall though, a snapshot in time of how consumer behaviour is changing. It’s up to the retailers to react, and fast.


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