Christmas sales might look pleasing, but are retailers really being honest with themselves?

There was an almost audible sigh of relief in the tone of last week’s Retail Week: Christmas hadn’t been so bad, after all.

It was the usual pattern: pessimists talking things down as we approached Christmas, a few horror stories and then a flow of more positive news from the majority of retailers, leading to an optimistic conclusion.

This week, I’m going to take the role of the pessimist talking things down after Christmas – I’m not at all sure that those Christmas figures are as good as they might appear.

In a column last year, I commented on how the City’s response to Christmas trading figures was far too extreme and how retailers shouldn’t be judged on those few weeks to such a high degree. Of course, nobody paid the slightest heed and the same thing happened this year – perhaps more so.

There is another perspective on this practice. If you are a retailer in the public eye, you will be acutely aware of the importance of good Christmas trading figures, so you will do whatever you can to hold them up. Most obviously – and it was obvious in many windows in December – discounting prices to keep volumes high is a well-established practice. It helps sales, but kills margin.

An obvious question to ask is: to what extent were decent Christmas sales “bought”? It is significant that retailers that refused to discount before Christmas – led by Next – recorded much lower sales numbers.

There are other things to look for, too. The supermarkets all displayed good figures – at face value, anyway. But, as we know, non-food is, by far, the fastest-growing segment in their business. Interestingly, none of the supermarkets disclosed their food figures, as far as I know. The one food retailer that did, Marks & Spencer, revealed a fall. I suspect that food sales were flat, or worse, for at least some of the big operators – Waitrose and Morrisons being honourable exceptions.

You might wonder where all this is going and whether it really matters all that much. Well, there was another announcement around Christmastime that went almost unnoticed.

This was that food price inflation is at an all-time high. I doubt this is true, as anyone who remembers the 1970s will recognise, but it is high, as I can see from Superquinn’s figures. So, if UK supermarkets are not increasing food sales, then they are really going backwards – and at a pace. Inflation has spread into general high street sales too, although by how much I don’t know.

When you look again at that table of Christmas sales and allow for all these factors, it doesn’t look quite so rosy. I think that youp need an honest, objective view of the state of a business as a starting point for any effective management process.

Fooling ourselves about the recent – or present – state of trade will only lead us further astray. So make sure you see your Christmas sales for what they really were.

Simon Burke, chairman, Superquinn and Majestic Wine