A focus on volumes and what drives them helped Marks & Spencer take a place on the Christmas winners’ podium and will mark out retail’s winners more generally, writes George MacDonald

“If in doubt, add quality in.” So said Marks & Spencer boss Stuart Machin as he revealed a Christmas performance that exceeded expectations at the food and fashion giant.

It’s an attitude that has stood Marks & Spencer in good stead as it won not just sales growth, but volume and market share over retail’s golden period – no mean achievement, and powered by a focus on value for money in all its forms, such as quality.

Retailers that gained volume – such as Sainsbury’s and Tesco as well as M&S – are the seasonal winners and look in prime position to keep up momentum.

Understandably, and especially when times are as tough for consumers as they have been, many retailers seek to preserve profitability as their number one priority. A retailer that doesn’t make money is a retailer that hasn’t long for this world.

“M&S has played a smart game. It hasn’t overlooked the fundamental importance of keen prices”

However, profit protection can only go so far – earnings will ultimately dwindle if they’re at the expense of ever-declining volumes. Ultimately, harsh sunlight exposes the uncomfortable reality that their market share has been gobbled up by others.

So M&S has played a smart game.

It hasn’t overlooked the fundamental importance of keen prices. In food, for instance, it has continued to invest in the Remarksable Value range, sales of which rose 18%.

It cited Kantar data indicating M&S was “the top-performing grocer in volume growth terms” over the Christmas quarter and has achieved record market-share highs.

In clothing and home, the retailer has signalled its intention not to increase prices this year. In a tough market, it has taken a ‘value you can trust’ stance, which has served it well.

While prices may not go down, a focus on style and quality has won over shoppers and lifted volumes. It increased market share, again according to Kantar data, including notching up the best full-price market share over Christmas in more than a decade.

The full-price point is important. It was an achievement in a promotional market and is, of course, better for profitability.

A reduced level of promotions helped lift M&S’ average selling price in clothing and home, supporting a 4.8% sales uplift in full-price sales at the retailer.

“While shoppers watched their spending over Christmas, they also showed themselves willing to splash out when there was a compelling reason to do so”

Machin said: “Our commitment is not to put prices up. What we’re doing is trying to price right the first time.”

He told Retail Week the retailer was “definitely more focused on volume growth”. That’s because “our job is to get the right product that resonates so customers buy more at M&S”.

While shoppers continued to watch their spending over Christmas, they also showed themselves willing to splash out a bit when there was a compelling reason to do so.

In clothing, particularly, retailers must give customers more reasons to buy, such as style and quality, to better secure themselves in the long term.

M&S’ regular research among shoppers found some grounds for optimism about the year to come, but 80% were still worried about the cost of living.

Assuming conditions remain pretty challenging – not helped by potential cost pressure as the Suez Canal supply route is disrupted by conflict in the Middle East – retailers will need to be on top form to part shoppers from their money. Value in all respects will differentiate the best performers.

Considering M&S’ strong seasonal showing, the City reaction was a bit bah, humbug. That was probably because, like Sainsbury’s, which was similarly punished, M&S did not increase its earnings expectations despite a strong Christmas.

Machin said he preferred to be “slightly cautious” and “not get too carried away”. But if he continues to pump up the volumes by focusing on what makes M&S special, the retailer should be a winner all year, not just at Christmas.