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After another challenging year for the high street, which saw household names such as Mothercare and Debenhams fall into administration, the retail sector has reviewed its performance over the all-important festive season.

2019 got off to a rough start, with consumer spending further dampened during the year by continued political uncertainty. The challenging climate was reflected in the retail sales for November 2019 (Office for National Statistics), which indicated the fourth consecutive month of contraction, despite early discounting. This continued through the festive period, with total sales during November and December declining 0.9% compared to the same period in 2018. With 2019 being the first year to ever see a decline in total sales, the British Retail Consortium (BRC) has labelled it ‘the worst year on record’, a 0.1% decrease in total sales compared to 1.8% growth in 2018.

Challenging conditions and continued customer uncertainty proved problematic for Morrisons, who a 1.7% decrease in sales in the 22 weeks to 5 January 2020.  However, it appears that investors were relieved by the result amid difficult trading conditions, with the company’s share price rising 3% upon release of the trading update. Alongside political uncertainty, poor performance for grocers has been put down to the ‘rise of discounters’, a trend that is expected to continue throughout 2020, according to the KPMG/Ipsos Retail Think Tank (RTT) .  Aldi’s outstanding Christmas sales exemplify this, with sales for the four weeks to Christmas Eve up 7.9% on the same period in 2018. However despite expectations of a post-election ‘Boris Bounce,’, Morrisons was not the only supermarket to suffer, as Sainsbury’s a 0.7% decrease in total retail sales in the 15 weeks to 4 January 2020. Notably, grocery sales were up 0.4% in this period, which has been attributed to competitive pricing, once again highlighting the need to stay on top of an increasingly promotional market.

Slashed prices also made for a difficult year for Superdry, whose full-price strategy left consumers looking elsewhere. The company suffered a 15.8% decrease in revenue in the 10-week period to 4 January 2020, due to ‘unprecedented levels of promotional activity coupled with subdued consumer demand’. This resulted in expected profits for the year decreasing from £40 million to between £0-10 million. Superdry stock fell 20% upon release of its .

After dropping out of the FTSE 250 in December, share prices also continue to dip for Card Factory in light of their Christmas season , where like-for-like sales fell 0.6%. Echoing the sentiments of much of the high street, the company states ‘The general election and weak consumer sentiment ensured that the long-running trend of declining high street footfall was maintained’.

Despite this harsh climate, Next plc has fared better, a 5.2% increase in its Q4 full price sales. Much of this was attributed to an increase of 15.3% in online traffic during the winter months, offsetting the 3.9% decrease in offline sales, as the high street continues to suffer from reduced footfall.

With e-commerce accounting for 20% of retail sales in the first half of 2019, as by Deloitte, it is becoming increasingly apparent that retailers need to adjust their strategy in order to survive. This is emphasised by numerous reports from traditional retailers noting an increase in online sales compared to offline.  Meanwhile online retailer Boohoo reported 44% revenue growth, further highlighting the shift in consumer patterns as the company continues to thrive while many established names pack up shop.  Acknowledging this shift, Sports Direct-owned Debenhams closed multiple stores this month, with more closures planned, in line with the of their CVA, in an attempt to ensure the brand is ‘fit for the future’. The group suffered a 3.8% decrease in transactional value ‘with weak footfall offset by growth in digital’, where sales were up 6%, during the crucial Christmas period. CEO Sergio Bucher stated in the that ‘the continued outperformance in digital reinforce our view that we are taking the right steps to protect the future of the business’.

Alongside increased online sales and promotional activities reported by retailers, another key trend for survival appears to be taking a more innovative approach to store design. Debenhams found that their 9 new stores ‘trading in new design format have outperformed the core chain, with the strongest LFL uplift being seen at Stevenage’. Selfridges has adopted a similar strategy, with the company investing in in-store experiences, designed to capture consumer attention, such as the giant snow globe in their Birmingham store. Alongside this, Selfridges has capitalised on the growing veganism trend. Demand for vegan hampers and confectionary helped boost the company’s sales in the run up to Christmas, and the retail giant saw sales increase 5% over the festive period.

Despite another tumultuous year for the High Street, between October and December FTSE 350 retail stocks rose overall. Whilst this could as a result of the ‘Santa Claus rally’ where stock prices tend to increase in the final weeks of December and early January, reduced uncertainty surrounding Brexit has left the RTT feeling ‘cautiously optimistic’ for 2020.