2. • Christmas 2010 trading summary
• 2010 in perspective
• Key issues in 2011
• 2011 expectations
2 Contents
3. • 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!
5. 2009 2010
• Winners were
Restaurants
department stores
Dept/Variety Stores
• Leisure and household
Clothing & Footwear
most challenging
Personal
Grocery
Leisure
Household
-4 0 4 8 12
%
5 Like-for-like Sales Averages by Category
6. • 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
7 Negative Like for Like Sales - Comparison
8. • no like-for-likes quoted, but total sales
increases of >90% group
• Non-Food - surprisingly good results,
compared to its own Food section
• something has gone right at last!
• there’s still a market for luxury
• 20% up over Christmas
8 Some Interesting Winners
9. • 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
11. 90 8000
Total Number of Stores
80 7000
Count of Retailers 70 6000
60
5000
50
4000
40
3000
30
20 2000
10 1000
0 0
2008 2009 2010
Retailer Failures 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
11 Retailer Failures
12. Put in context of 2010 trading overall:
60%
50%
40%
% Retailers
30%
20%
10%
0%
Healthy Head above water Very worrying
2009 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
12 Business Health
13. %6
5
4
3
2
1
0
Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec-
09 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
• It is therefore critical to understand the ‘direction of travel’ for
individual retailers
13 UK Retail Sales Growth (BRC Data)
14. • Direction of travel
is not consistent
• Identifying
winners and
losers is essential
-60% -40% -20% 0% 20% 40%
% Change in BIS Index (2008 - 2010)
14 Change in Financial Health
16. 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
17. 40% 70%
Internet / Supermarket Share
35% 65%
Town Centre Share
30% 60%
25% 55%
20% 50%
15% 45%
10% 40%
5% 35%
0% 30%
2005 2010 2020
Internet Supermarkets 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…..
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
19 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
20 FSP Predictions
