Tesco and Morrisons released their Christmas trading figures today, cramming news reports.
I’ve combined all the recent like-for-like trading updates in the chart below for easy comparison. Briefly:
1) Aldi and Lidl are forging ahead: whilst they don’t release sales figures, both have confirmed they are experiencing double digit growth. Kantar confirmed in December that for the first time the majority of UK households now shop at Aldi or Lidl.
2) With Waitrose (+4.1%) and M&S food (+3.1%) performing well, the top end of the market is buoyant – especially with people visiting these stores for a destination shop in the run up to Christmas.
3) The big four are caught in the middle and their fortunes are mixed;
- JS is static (+0.2%);
- Asda release their figures on February 20th;
- Tesco is suffering: a 2.4% drop is severe, but doesn’t tell the whole story. Their convenience Express stores showed a huge 25% LfL increase and their online business was up 11% for Christmas. It could have been worse;
- Morrison’s results (-5.6%) are catastrophic – without an online business (it launches tomorrow, 14 years after Tesco) they are fighting a war on fewer fronts than their competitors.
Looking at the results and thinking about what shoppers have been saying in the past few months, I see three underlying shopper trends:
- People have less money today than they did a year ago. That means fewer consumers who shop at discounters year round traded-up to one of the big four at Christmas.
- Many people ditched the “big shop” at a single retailer long ago, and are now in a repertoire shopping pattern. Waitrose shoppers shop at Aldi – and they’re likely to brag about their savviness over their Heston pud.
- Online and convenience are driving growth. Large out of town hypermarkets cost money to drive to and don’t always provide an easy, convenient shopping experience. Sainsbury’s now has more convenience stores than supermarkets.