What are we to make of the Christmas trading statements? And what are we to make of the latest Office for National Statistics numbers for December?
In this era of truth being dismissed as irrelevant, it is tempting to draw the analogy with retailing.
At best, most of these numbers should be treated with huge caution.
Let’s begin with the company statements – and it is important to remember they are unaudited.
It amazes me how many people seem to simply take the numbers at face value.
First, one company’s numbers must never be compared with another’s because the bases/definitions of the two are certain to be different.
Second, the fact that definitions and timings can be changed at will means that a company’s own figures can often not be compared with its own historical numbers. There are no industry norms in presentation.
Beyond this comes the question of absolutes. Most people are focused on year-on-year percentage numbers and ignore the absolute (base) numbers on which they are based.
“Then there is the issue of the previous year’s comparatives. Christmas 2015 was the weakest for a generation”
The base metrics of an apparently weak Christmas performer may be light-years ahead of a weaker company that has a good Christmas.
The former will still be light-years better than the latter in absolute terms, even if the year-on-year performance of the latter appears better.
Then there is the issue of the previous year’s comparatives. Christmas 2015 was the weakest for a generation.
In many ways, that year’s weak performers only had to have a very modest Christmas trading season this time to generate apparently good-looking numbers.
Meanwhile, those that did pretty well in 2015 in spite of the awful background had to run that much faster in 2016.
Office for National Statistics numbers
Then there are the Office for National Statistics (ONS) retail numbers, critical to the UK’s economic performance.
For some months now the retail sales data have looked unbelievable and totally at odds with anecdotal evidence from leaders in the trade.
The datasets around pure-play online and small retailers have looked particularly incredible.
Something has been going badly wrong at the ONS and, if data is significant in helping our political leaders navigate the optimum course for our economy, we are sailing in the dark with these numbers. They need sorting urgently.
The real picture
So where does this lead us? What was Christmas really like? On the basis of discussions with leadership teams, I think it was okayish.
Given the background of uncertainty, it could have been much worse. However, it was certainly not great, and in broad terms took us back to where we were in Christmas 2014.
“Anyone who thinks we will see lots of price rises needs to work out where consumers are going to find the extra tens of billions of pounds”
Discounting was very high and many ‘bought’ their Christmas sales, with the margin hit likely to become apparent later this year.
Whatever anyone thought of 2016, this new year will be far more challenging. The headwinds have been discussed at length.
But anyone who thinks we will see lots of price rises needs to work out where consumers are going to find the extra tens of billions of pounds.
The hit will largely be borne by retailers and suppliers, and the resulting turmoil will kick off a major industry restructure.