Online Key To Christmas Retail Success

The U.K. government had hoped cooling inflation and a revival in consumer confidence would boost spending, but Christmas sales showed very little pick-up in growth, except online, which proved the saviour for some retailers and the downfall of others.

Online sales accounted for up to 20% of total retail spend this Christmas according to e-retail industry body IMRG, and those retailers that have a strong web and mobile presence reported a fillip to generally weak store-based sales.

Sales at Argos, the general merchandise store chain owned by Home Retail Group PLC (HOME.LN), returned to growth after several years of decline, the company reported Thursday, as its strong online strategy coincided with rampant demand for consumer electronics, particularly tablets.

Tablets also boosted Curry's and PC-World owner Dixons Retail PLC (DXNS.LN) which Thursday reported an 8% rise in same-store sales in the U.K. Chief Executive Sebastian James said the chain sold a tablet every two second (during opening hours) in the 12 weeks to Jan. 5., with Apple making up around a third of those sales, while competitors like Samsung Galaxy and Google Nexus gained market share.

While online sales and a well-developed multi-channel offer proved pivotal to Christmas sales growth at retailers like Next PLC (NXT.LN), Debenhams PLC (DEB.LN), John Lewis, Tesco PLC (TSCO.LN) and J Sainsbury PLC (SBRY.LN), the dearth of an online presence proved the undoing of others.

Wm Morrison Supermarkets PLC (MRW.LN)is trailing its rivals because it doesn't offer online grocery sales, and is now scrambling to rework its 'slow and careful' multi-channel strategy. Meanwhile the wholesale shift of books, CDs and movies online sounded the death knell for HMV Group PLC (HMV.LN) and Blockbuster, both of which have called in the administrators this week with the potential loss of thousands of jobs.

Even though CD and DVD retailer HMV was the last man standing on the high street after all its competitors had gone to the wall, without a strong online presence it couldn't compete as more than 70% of music sales have already migrated onto the web.

Similarly DVD rental chain Blockbuster failed to embrace the growing demand for web-streaming or mail-order subscription services like Lovefilm and Netflix. Photo store Jessops also called in the administrators as it gave up fighting the inexorable rise in camera phones and the structural decline of the camera industry.

Still, not all success stories were online. AB Foods-owned Primark, which is alone amongst the major retailers in having no transactional website, Thursday reported a 25% jump in third quarter sales, in part because of new stores opening but it also called out strong (but unquantified) like-for-like sales. Its fast turnaround to get the latest fashions on its rails combined with low prices remains an attractive combination for consumers

While web-connected consumer electronics topped the gift list and facilitated the buying process, they couldn't offset what remains a sluggish consumer spend trend. Total sales in December rose 1.5%, below the 2.7% rate of inflation. Chris Williamson , chief economist at Markit says weak consumer and business spending is undermining the U.K.'s growth prospects, while some economists also predict the U.K. economy may be heading for a triple dip recession.

-Write to Kathy Gordon at kathy.gordon@dowjonescom

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Debenhams (LSE:DEB)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024