Who are the winners and losers?

The reporting season is now over and we can see which companies and sectors have done well and which have struggled.

The major supermarkets have all done well over the Christmas period with Morrisons the star performers and Tesco at the lower end of expectations. M & S has been disappointing but the smaller discount chains such as Aldi and Lidl have gained market share.

Clothing has been mixed with the consumers continuing to trade down. Primark, New Look and Peacocks have continued to do well at the expense of the middle ground particularly M & S again. Sales at Next are down but due to keeping their nerve, refusing to discount until after Christmas, coupled with their excellent stock management they should achieve their profit forcasts.

Department Stores have bucked the trend with Debenhams doing well although their high debt is a worry for the markets.

The biggest losers seem to be on the big ticket items. Furniture has been particularly hit. We’ve seen MFI and Land of Leather falling into administration and it’s the one area of John Lewis which has seen a significant drop in sales.

Electricals has been a mixed bag – flat screen TVs doing well but computers and cameras performing poorly. Jessops is finding trading tough but who but the serious photographer uses a camera nowadays? Today’s mobile phones perform perfectly adequately for most people. With laptops now costing ½ what they were 18 months ago it means the likes of PC World have to sell twice as many just to maintain turnover. No wonder the DSG group sales are down.

So what does this tell us for 2009?

The food area will still do well but although customers may trade down from premium to basic ranges there are others who will forgo a visit to a restaurant and buy a ready meal from the ‘finest’ range along with a decent bottle of wine.

Clothing, even more than ever, is going to have to be ‘the right item’ at ‘the right price’. Good products at keen prices are imperative.

It would be nice to think that as fewer will be moving house this year that they will look to redecorate or extend, replacing existing furniture but the reality is that it is an easy thing to ‘put off until things improve’. Even if there is no immediate threat of redundancy the reluctance to spend will still be there. It’s going to be an even more difficult year for the furniture and household industry.

The sale of big flat screen TVs should continue as people stay at home more seeing an upgrade to HD and Home Cinema as an investment. Sales of Wii will continue for similar reasons maybe even Wii Fits replacing some Gym memberships. The Acer Aspire has inspired a growth of subcompact notebook computers, or ‘netbooks’ but at typically less than £200 it is unlikely to make up for the loss of PC and laptop sales. And, until the next ‘iPod’ comes along the rest of the electrical sector will struggle.

Next week I’ll discuss some of the strategies you could use to survive 2009.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Rescue and Recovery Consultant

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