CHRISTMAS could well prove to be a cracker for retail sales, according to the latest statistics from shopping watchdogs.

Recent reports from KPMG and the British Retail Consortium (BRC) point to a 2.2 per cent rise in till sales this November, making it the most lucrative pre-Christmas shopping period seen in the last five years.

The monthly KPMG and BRC Retail Sales Monitor indicate that like-for-like sales grew 0.9 per cent in November, with household electrical goods doing particularly well in the run-up to Christmas. Overall on-line sales are up by 21 per cent.

And whether you like or loathe this latest American import, the well-publicised Black Friday shopping surge on November 29th undoubtedly helped to boost trading, as millions of bargain hunters flocked to high-street hotspots to pick up cheap deals on big-ticket appliances and other goods.

Stores coming out on top included John Lewis, who saw trade fuelled both by Black Friday and their price matching of competitor events. This winning combination made the last week of November the biggest ever week in their 150-year trading history for sales as they reported a 56.8% surge in Black Friday week revenues, with income from that period alone reaching a record £179.1m. Fashion retailers, including ASOS, also recorded strong trading over the Black Friday weekend, using aggressive ‘flash’ deals to off-load stock leftover from the unseasonably warm autumn.

However, although sales at ASOS and John Lewis have been at an all-time high, not all retailers have fared quite so well. This includes Marks and Spencer, who have been struggling to cope with a Black Friday orders backlog.

The retailer is facing fury from some customers over long delays for goods purchased on-line over the Black Friday weekend. An insight into the negative impact of the reported problems at their new state-of-the-art delivery centre was given by the 2.7 per cent drop in the company’s share price last week. According to analysts, a dent in consumer confidence in the run-up to Christmas could be critical for Marks and Spencer, and could mean a further shrinking of online sales for the high-street retailer into the last quarter of the financial year.

Likewise, the festive period has not been as kind to food retailers, whose sales fell for the seventh month in a row, as the supermarkets continue to feel the pinch of a price-war. High-street giants, Tesco and its rivals Asda, J Sainsbury and WM Morrison, have all reported falling sales, as they attempt to adjust to a change in shopping habits. However, with a solid online presence, Ocado, which was founded in 2000, seems to be gaining ground over the traditional supermarkets in what is a highly competitive sector.

In their latest trading update, the online food retailer reported that annual sales have gone through the £1bn mark for the first time. This performance puts Ocado on course to record its first ever annual profit, with its earnings also boosted by a tie-up with Morrisons.

However, the company’s strategy remains under scrutiny in the City. Although they have picked up of late, shares in Ocado are down by around a fifth in 2014 and the retailer’s sales growth slowed during the year. But, with pressure increasing on supermarkets with estates of large stores to arrest falling sales, Ocado’s significant online presence and low overheads, point to the potential for more and more efficiency as they scale up their business.

Nick Williams

nicholas.williams@brewin.co.uk

Nick Williams is an Assistant Director at Brewin Dolphin and offers advice on a wide range of financial services to private clients, trusts, charities and pension funds.

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