Strategy consultants OC&C look at the key themes of the best Christmas trading period in five years.

Last Christmas was the strongest festive retail performance since 2011, when Christmas also fell on a Sunday.

Overall retail like-for-likes were up by 1.0% during Christmas 2016 versus the previous year (as measured by the BRC average) – after four years of broadly flat growth. Footfall also held up much better than the previous year, slipping by only 0.2% in December 2016 versus 2% in 2015.

Best-performing retailers, Christmas 2016

Christmas 2016 trading

Christmas 2016 trading

Chart to show the best-performing retailers during Christmas 2016 trading. Green = store-based figures. Orange = online and direct figures.

There was likely some gain from stores shutting for Christmas and New Year on a Sunday rather than a weekday, as in previous years, with unrestricted opening hours.

Even in an era when online shopping can be done anytime and consumers have sufficient confidence in delivery options to leave shopping until late, there was still a late surge in store sales.

Many retailers reported strong trade on the Friday and Saturday pre-Christmas – and those who held their nerve to remain on full price reaped the benefits.

The online channel continues its onward march – recording yet another year of double-digit growth rates.

Much of this is now powered by mobile, with smartphones rapidly catching up with tablets as a means of transacting, and click-and-collect.

Retailers will need to continue to enhance and develop mobile and multichannel capabilities to win in this evolving environment.

Festive winners

Burberry topped the list of Christmas winners this year, with a 40% increase in UK like-for-like sales. Fortnum & Mason also delivered strong growth.

While sterling’s decline is causing pain for most retailers in managing cost inflation, for luxury retailers it tempted international shoppers looking for a bargain to splash the cash.

Worldpay reported high street spending on non-UK credit cards in December was up 22% year on year, much of this focused on high-end boutiques and department stores.

Other winners were those in discretionary categories with distinctive propositions or targeted clear niche needs; Boux Avenue, Mountain Warehouse and Supergroup being the pick of store-based players.

Feast or famine?

The grocers had a better Christmas than many expected – and while Morrisons and Waitrose topped like-for-like growth in the sector, all of the major players reporting made it into positive territory.

Easing grocery deflation helped – grocery inflation was up 0.2% in December after a prolonged period of deflation – but was not the whole story.

Kantar reported total supermarket sales were up by 1.8% in December. It is likely that strong product innovation efforts by most major players tempted consumers to trade-up into own label premium lines.

While the Christmas period was positive, no-one expects 2017 to be easy. Much work has been done to combat the discounters but their ongoing space growth still poses a headwind.

And passing through cost inflation to a price sensitive consumer will pose a different set of challenges.

The Black Friday effect

Black Friday continues to embed itself in the consumer consciousness with rising awareness and participation versus the previous year.

However, retailers are becoming savvy as to how they use the event, learning from previous years in which widespread discounts cannibalised future full-price sales.

Efforts are increasingly focused on carefully selecting the promotional offer to target specific components of the range and spreading offers over a longer period to maintain excitement.

Cost efficiency remains critical

After the surprises and shocks of 2016, any predictions for the coming year need to be treated with a large dose of caution while the shape and impact of Brexit remain unclear.

Nevertheless, higher buying prices from weaker sterling are already a reality for many retailers and rising business rates and minimum wage will put further pressure on costs.

In an environment where weakening consumer confidence is a risk, maintaining margins may not be as simple as merely passing price rises through to the consumer.

A focus on cost efficiency and carefully managing price perception will be essential tools for surviving and thriving in 2017.

Christmas 2016 trading index: store-based

Retailer% change in like-for-like sales 2016Weeks of PeriodPeriod End% change in like-for-like sales 2015Movement 2015-16
Burberry Group (Retail) 40.00% 12 31 December n/a -
Boux Avenue (UK) 16.6% 6 24 December 8.3%
Fortnum & Mason 16.0% 5 1 January 15.0%
SuperGroup 14.9% 10 7 January n/a -
Mountain Warehouse 13.6% 6 1 January 14.7%
Mamas & Papas (Retail)¹ 11.0% 13 25 December 18.0%
Majestic Wine 7.5% 10 2 January 7.3%
Superdrug 7.2% 5 2 January 6.8%
B&M Retail 7.2% 13 24 December -0.7%
Halfords (Retail) 7.0% 15 13 January n/a -
The Fragrance Shop¹ 6.8% 6 31 December 7.7%
Greggs 6.4% 13 31 December 2.3%
Moss Bros Group 6.1% 23 7 January n/a -
Dixons Carphone (UK & ROI) 6.0% 10 7 January 5.0%
Debenhams 5.0% 7 7 January 3.7%
WH Smith (Travel)¹ 5.0% 21 21 January 5.0% =
Foyles 4.3% 4 31 December 4.7%
Argos (Sainsbury’s)¹ 4.0% 15 7 January -2.2%
Hobbs 3.9% 13 31 December n/a -
The Cooperative Group 3.5% 3 31 December n/a -
Booker¹ 3.2% 13 30 December -3.1%
Morrisons 2.9% 9 1 January 0.2%
Waitrose 2.8% 6 31 December -1.4%
House of Fraser (Stores & Online) 2.7% 6 31 December 5.3%
John Lewis 2.7% 6 31 December 5.1%
The Entertainer (Total) 2.6% 5 31 December n/a -
Booths 2.6% 3 7 January -1.4%
OC&C Weighted Store Average² 2.6% - - -0.3%
Marks and Spencer (Group) 2.3% 13 31 December -5.8%
Nisa 2.2% 10 1 January n/a -
Maplin Electronics (Stores) 1.4% 6 24 December n/a -
Ryman 1.4% 6 24 December 0.7%
Marks and Spencer (All Categories) 1.3% 13 31 December -2.5%
British Retail Consortium Average¹ 1.0% 5 31 December 0.1%
Mothercare (UK) 1.0% 13 7 January 4.2%
WH Smith (Group)¹ 1.0% 21 21 January 2.0%
Tesco (UK)¹ 0.7% 6 7 January 1.4%
Marks and Spencer (Food) 0.6% 13 31 December 0.4%
Dunelm Group 0.20% 13 31 December -0.8%
Sainsbury’s 0.1% 15 7 January -0.4%
Pets at Home¹ 0.1% 12 31 December 2.2%
Topps Tiles (UK) -0.3% 13 31 December 4.4%
Ernest Jones (Signet)¹ -2.2% 9 31 December 6.9%
WH Smith (High Street) -3.0% 21 21 January n/a -
Bonmarché (Stores) -3.4% 5 24 December -2.7%
H Samuel (Signet)¹ -4.9% 9 31 December 1.6%

Methodology: OC&C has used the shortest reported period of like-for-like sales during the Christmas period. Excludes results where the shortest reported period is greater than 26 weeks. Periods vary significantly between retailers therefore care should be taken in interpreting the results. Definitions of like-for-like may vary between retailers but principally refer to same-store sales. Where possible figures relate to trading in UK / UK & Ireland. Figures are stated as reported - no decimal place indicates rounding at the reporting stage. Figures exclude fuel sales. Notes: 1. 2016 period length differs from 2015; 2. Weighted by most recent reported annual revenue.

Notes: 1. 2016 period length differs from 2015; 2. Weighted by most recent reported annual revenue.

Christmas 2016 trading index: Internet and direct

Retailer% change in like-for-like sales 2016Weeks of PeriodPeriod End% change in like-for-like sales 2015Movement 2015-16
Superdrug (Online) 47.00% 5 2 January 47.0% =
sofa.com (Online) 38.0% 12 9 January n/a -
Mountain Warehouse (Online) 31.8% 6 1 January 49.2%
The Entertainer (Online) 31.7% 5 31 December 40.0%
Boohoo 31.0% 17 31 December 45.0%
Maplin Electronics (Online) 29.3% 6 24 December n/a -
Gear4Music 29.0% 17 31 December n/a -
Hobbs (Online) 26.7% 13 31 December n/a -
Reiss (Holdings) Ltd (Online) 26.4% 6 7 January n/a -
The Entertainer (Click & Collect) 25.0% 5 31 December 29.3%
Fortnum & Mason (Online) 22.0% 5 1 January 38.0%
Shop Direct (Very.co.uk) 19.0% 7 23 December n/a -
ASOS (UK) 18.3% 17 31 December 25.0%
Hotel Chocolat (Online) 17.1% 13 25 December n/a -
Debenhams (Online) 17.0% 7 7 January 15.4%
IMRG Capgemini e-Retail Sales Index¹ 16.0% 6 24 December 12.0%
Express Gifts (Findel) 14.0% 16 24 December n/a -
N Brown (Online) 12.0% 18 31 December 13.0%
John Lewis (Online) 11.8% 6 31 December 21.4%
OC&C Weighted Direct Average² 11.0% - - 16.4%
Findel 11.0% 16 24 December n/a -
Game (Online) 10.3% 23 7 January n/a -
Marks and Spencer (Online) 9.4% 13 31 December 20.9%
Shop Direct (Group) 9.0% 7 23 December 6.0%
AO.com 8.9% 13 31 December 24.0%
Fat Face Ltd (Online)¹ 7.6% 8 24 December 43.0%
British Retail Consortium Average (Online, non-food)¹ 7.2% 5 31 December 15.1%
Mothercare (Online) 5.5% 13 7 January 11.8%
N Brown (Group) 4.1% 18 31 December 4.1% =

Methodology: OC&C has used the shortest reported period of like-for-like sales during the Christmas period. Excludes results where the shortest reported period is greater than 26 weeks. Periods vary significantly between retailers therefore care should be taken in interpreting the results. Definitions of like-for-like may vary between retailers but principally refer to same-store sales. Where possible figures relate to trading in UK / UK & Ireland. Figures are stated as reported - no decimal place indicates rounding at the reporting stage. Figures exclude fuel sales. Notes: 1. 2016 period length differs from 2015; 2. Weighted by most recent reported annual revenue.

Notes: 1. 2016 period length differs from 2015; 2. Weighted by most recent reported annual revenue.

  • Tom Gladstone is partner at OC&C Strategy Consultants