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UK Retail Briefing - UK - January 2021
Analyst Comment – Christmas Trading 2020
 
Tougher comparatives for 2020
We must start our analysis of these numbers talking about reporting periods. The numbers for December 2020 cover the period of 29 November to 2 January, meaning they take in the Sunday of the Black Friday weekend, whereas in 2019 the period covered 24 November to 28 December, covering the full Black Friday period. Naturally this means tougher comparatives for 2020, before we add in the impact of local restrictions and the move into Tier 4 before Christmas for London and much of the South East.

Christmas trading held up
This is why, when putting together our Christmas estimates (see: Christmas 2020: Prospects for The Grocery Sector), we chose to make estimates based on November and December sales combined – to try to aid comparability. Those estimates, made on the day of the announcement of the November national lockdown, took in three scenarios but the central forecast predicted a minor overall decline of -0.4%, made up from 5.0% growth in grocery, -16.0% decline in non-food specialists and 37.4% growth for non-store (online-only) retailers.

The final figures show overall growth of 3.2% made up from 4.1% growth from the grocers, -6.8% decline in non-food specialists and 34.8% growth for non-store (online-only) retailers. The numbers from the grocers, falling between our central and worst case scenario, and non-store retailers, between our best and central, are within the ballpark of what we expected – but as we wrote in our November commentary the strength of non-food trading in November, despite store closures, was both encouraging and surprising.

Timing of Black Friday key
We will do a deep dive into these numbers and consumer behaviour during the past festive period in our upcoming Christmas Gift Giving – UK, February 2021 Report, but December did bring some notable if predictable trends. Categories which trade bigger on Black Friday were naturally more disproportionately impacted by the shifting reporting periods with a 12.0% decline in household electricals, -25.5% in computers and telecoms and -13.9% in hard copy media specialists.

Again it was the household categories which showed strongest growth, with furniture (+7.8%) and DIY (+33.0%) yet again being standout performers. Conversely again it was fashion which underperformed with sales down 18.1%. Online sales soared by 45.8% and took a record 31.3% of sales for the month of December, but this growth naturally fell back from the high of 80.0% seen in the lockdown and Black Friday boosted November.

The numbers for the grocers are particularly hard to judge. Overall grocery sales were up 0.8% in December. The big four grocers do play in Black Friday, to varying degrees, but comparative to core trade the impact is smaller than at non-foods, so although this will account for some of the slowdown from 7.7% growth in November to 0.8% in December it is clear COVID-19 restrictions played the bigger part.

Online continued its surge
The result is still the largest ever month in terms of sales for the grocers but the last minute restrictions, combined with no New Year celebrations, means that volumes suffered. This was a clear win for the convenience sector with the ONS’ series for ‘small businesses’ growing 7.0% compared to -0.1% at the multiples. Online continued its rapid growth with 92.5% growth in December, although notably the share of sales taken by online-ticked back a whole percentage point from 10.9% in November to 9.9% in December with clearly some move back to stores in the month.

Retail adaptations helped drive sales
Overall, in one of the most difficult festive periods, demand held up well – indeed the 3.2% growth in November and December beat even our best case scenario number (+1.4%). This was down to both a determined consumer base, to enjoy the festive period, and the adaptability of the retail sector – which showed it had learnt much from the first lockdown in how to trade under the harshest restrictions.

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