The crucial Christmas trading proved a strong one for food retailing, as consumer spending rose and like-for-like sales increased across the sector.

Retail Week analyses the themes that emerged from the grocers’ festive updates and what they tell us about the market in 2017.

Clothing became increasingly important

As the grocery market becomes ever-more competitive on both quality and price – with margins braced for a further squeeze amid increased sourcing costs – supermarket chains have increased their focus on higher-margin clothing propositions to aid growth.

That drive paid dividends for the three listed members of the big four during the festive season.

Tesco posted a 4% uplift in like-for-like F&F clothing revenues during its six-week Christmas trading period to January 7, as sales of seasonal fashion lines surged 40% year-on-year.

Sales of Sainsbury’s Tu clothing ranges grew 10% across its wider quarter, with non-food performance offsetting “slightly negative” grocery sales and inching the retailer into positive like-for-like sales territory.

Morrisons, which is growing from a much smaller clothing base than its peers, installed a presence for its Nutmeg brand into each of its supermarkets by the end of 2016, helping fashion revenues jump more than 30% over the nine weeks to January 1.

Following the success of their Christmas clothing lines, the supermarkets should bid to capitalise further on seasonal events this year.

Own label investment paid off

Once again, customers demonstrated their willingness to trade up and treat themselves over the Christmas period as the grocers’ investment into own-label premium lines paid off.

Waitrose delivered a 21.4% spike in revenues from its Waitrose 1 premium label, while Tesco’s like-for-like food sales advanced 1.3% over Christmas, aided by Finest party food ranges.

Similarly, Morrisons hailed the impact of its Best premium label and Aldi also gained ground on its more upmarket rivals as its Specially Selected luxury lines drove its spike in total sales.

But the biggest talking point was Sainsbury’s, which, despite usually being the standard bearer in this category with its Taste the Difference range, registered sluggish festive food sales.

As Sainsbury’s nearest rivals begin bridging the quality gap, investment into improving recipes could prove a key battleground in 2017.

Defiance was maintained on price rises

Despite the plummeting value of the pound following June’s Brexit vote, grocery bosses remained defiant they would mitigate price rises for consumers.

Uncertainty over price rises remain “the several million dollar question”

Charlie Mayfield, John Lewis Parternship chairman

When asked how additional sourcing costs would impact Waitrose, John Lewis Partnership chairman Charlie Mayfield said the uncertainty over price rises remained “the several million dollar question”, but insisted the upmarket grocer would heighten its “focus on value”.

And its rivals won’t want to undo the hard yards they have gained by ditching deals in favour of everyday low prices.

Sainsbury’s said its “typical Christmas basket” was 14% cheaper compared to 2014, following investments in price and a scaling back of promotional participation from 31% to 26%.

Tesco’s equivalent basket fell 7% from September 2014, but Lewis admitted Tesco was “not immune” to inflationary pressures in the market.

He said price rises had already reached the shelf edge in categories such as pork and cheese, but declared Tesco’s commitment “to keep doing everything we can to minimise the impact.”

Whether grocery retailers can convert such words into action, presumably at the expense of slimmer margins, is an ongoing question – the answer to which should emerge this year.

Supermarkets continued to rebound

Messrs Lewis and Coupe have both proved staunch supporters of larger supermarkets in the past – and Christmas trading results indicated that the performance of bigger sheds continued to rebound.

Tesco recorded sales growth “across all formats”, with Lewis adding he was “very pleased with Extra” – its biggest stores – which have benefitted from concession partnerships with the likes of Arcadia and Holland & Barrett.

Sainsbury’s says it has seen “a halo effect” on food sales in stores containing an Argos concession

Sainsbury’s did not pull out separate figures for its 604 supermarkets but said it had seen “a halo effect” on food sales in stores containing an Argos concession.

And Morrisons’ ‘fresh look’ store revamp programme appeared to bear fruit with growing footfall and a 1.6% rise in store like-for-likes over Christmas.

With the discounters rolling out more modern stores and Waitrose reimagining its bigger shops by focusing on food service, the pace of change and innovation in supermarkets appears set to accelerate in 2017.

But with so many areas of investment to consider across their businesses, can the grocers continue the pace of change when it comes to reshaping their bricks-and-mortar portfolios?

Operational efficiencies were improved

A word at the heart of many grocery Christmas trading updates was availability – a key measure of success for supermarket chains, particularly at peak trading periods.

Tesco lauded “strong operational performance” as its stores and distribution network not only withstood heightened demand but boosted availability 1% in the peak Christmas week, helped by on-time deliveries to stores hitting 98.9%.

Morrisons boss David Potts said the grocer’s availability “improved significantly” after rolling out a new sales-based automated ordering system to keep shelves replenished, while the Co-op said there were 300,000 fewer gaps on shelves across its estate compared to last Christmas.

Although it provided no visibility in its update, evidence from Aldi’s stores also suggested it had overcome some of the operational difficulties it faced last years as retailers learned lessons from ghosts of Christmas past.

But the festive trading period has served up plenty more food for thought for the grocers as 2017 swings into action.