FSP Christmas Sales Report - 2010
• Christmas 2010 trading summary • 2010 in perspective • Key issues in 2011 • 2011 expectations
2
Contents
• It affected business but did it reduce sales? • Next says it lost £22m of sales, HMV £20m, M&S £55m and Debenhams £30m • However: – Brent X closed Saturday before Christmas but then had 2 record days – Peter Cowgill, CE of JD Sport, claims ‘lost’ sales were exaggerated – BRC said reluctance to spend was a result of economic and job uncertainty
• There is a general ‘consensus’ (amongst retailers) that non-food lost c2% of sales due to the snow
3
The Weather!
Christmas Trading Results: UK Retail Extracts
2009
2010
• Winners were department stores
Restaurants Dept/Variety Stores
• Leisure and household most challenging
Clothing & Footwear Personal Grocery Leisure Household -4
5
0
%
4
8
12
Like-for-like Sales Averages by Category
• 2009 better for most than 2008 • 2010 modest performance • Note Burberry at +14%, Aurum Group +15% and White Company +24% (total sales)
6
Positive Like for Like Sales - Comparison
7
•
Direction of travel worrying for Comet/Thorntons
•
Surprisingly weak performance by New Look
Negative Like for Like Sales - Comparison
• no like-for-likes quoted, but total sales increases of >90% group • Non-Food - surprisingly good results, compared to its own Food section
8
•
something has gone right at last!
•
there’s still a market for luxury
•
20% up over Christmas
Some Interesting Winners
• Christmas revealed little that was not known: – Bad weather can affects retailing (or not!) – One-stop shopping locations benefit - covered malls, department stores and supermarkets • But sales growth is slowing – the difference between the best and the rest is increasing • Retailers direction of travel is important – not just sales extracts • Like for like figures are interesting but should be treated with caution • Sales are vanity, profit is sanity
9
Christmas Sales - Summary
2010 Trading – a Glance Back
7000 6000 5000 4000 3000 2000 1000 0 2008 Retailer Failures
• • • •
11
Total Number of Stores
Count of Retailers
8000
90 80 70 60 50 40 30 20 10 0
2009
2010 Store Closures
The shake-out has slowed Many casualties already had a chequered history e.g. Adams, Faith 2010 was the Year of the Phoenix - Cruise, Thoughts Cards, Happit British Bookshops and Krisp latest casualties
Retailer Failures
Put in context of 2010 trading overall: 60% 50%
% Retailers
40% 30% 20% 10% 0%
Healthy
Head above water
2009
12
Very worrying
2010
•
There has been a marked increase in the proportion of Healthy and retailers and a decline in Very Worrying
•
FSP tracked 62 new retailers opening in 2010
Business Health
%6 5 4 3 2 1 0 Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec09 09 10 10 10 10 10 10 10 10 10 10 10 10 3mth Like-for-Like 3mth Total
• But the sales trend remains unmistakably down •
13
It is therefore critical to understand the ‘direction of travel’ for individual retailers
UK Retail Sales Growth (BRC Data)
-60%
14
-40%
-20% 0% 20% % Change in BIS Index (2008 - 2010)
Change in Financial Health
40%
•
Direction of travel is not consistent
•
Identifying winners and losers is essential
2011 - Key issues
UK
External
VAT Increase
Rising Commodity Prices
Public Sector Cuts
Sovereign Debt Crisis
Rising Inflation / Interest Rates
Falling Exchange Rate
Falling House Prices Pay Restraint Fragile Consumer Confidence Restricted Consumer Access to Credit Stalled Retail Development Pipeline
16
Key Factors
70%
35%
65%
30%
60%
25%
55%
20%
50%
15%
45%
10%
40%
5%
35%
0%
30% 2005 Internet
2010 Supermarkets
Town Centre Share
Internet / Supermarket Share
40%
2020 Town Centres
Source: FSP
•
Growth in Internet and Supermarket turnover significantly higher than on high streets between 2005 and 2010
•
If trends continue, by 2020 the majority of comparison goods sales will take place outside town centres
17
The Elephant in the Room…..
2011 - What sort of a year?
19
•
Middle ground will continue to be squeezed
•
Weakest/smallest of the value operators will come under pressure
•
Electronics – some ‘rationalisation’ would not be surprising
•
Household goods – continued depression of house market
•
Tired retail formats e.g. Moss Bros, HMV, Bhs?
•
Middle sized towns will continue to lose out to larger towns, OOT and on-line, leading to continued consolidation of portfolios
•
Public sector dominated economies will be hit
•
Margin pressure will continue to squeeze sustainable rents
2011 – Where Will It Hurt?
20
•
Retailers with strong brands, distinct market positions and attractive formats will keep ahead of the pack e.g. H&M, Hollister, Apple
•
Tough times will continue to spawn innovation – more websites
•
New market entrants e.g. Gillyhicks, Forever 21, 7 For All Mankind
•
Growth of home-grown newcomers e.g. Boux Avenue, Hed Kandi
•
Quality, value and customer experience will out perform the market e.g. regional malls, factory outlet centres, John Lewis
•
Successful trading locations will be those which embrace and exploit the needs of the consumer
•
Successful landlords will be those who understand their occupiers and adapt to the evolving needs of their shoppers
FSP Predictions
FSP 19 Manor Courtyard Hughenden Avenue High Wycombe HP13 5RE UK T +44 (0) 1494 474740 F +44 (0) 1494 474262 E fspretail@fspretail.co.uk W www.fspretail.co.uk & www.snap-shop.co.uk
Fripp Sandeman and Partners Limited, trading as FSP G Nicholson (Managing Director) J H Fell J Hewson K Gunn Registered Number 1284879 Registered Office 19 Manor Courtyard Hughenden Avenue High Wycombe Buckinghamshire HP13 5RE ©FSP 2011