Christmas shopping
The business news that matters
Scheduling note: There will be no Off to Lunch tomorrow, back on Thursday
Hello and welcome to the latest edition of Off to Lunch…
Retail sales rose by 2.7 per cent year-on-year in November, according to new data, sparking concerns about a challenging festive period for consumer businesses.
The data is from the latest British Retail Consortium and KPMG index, which is closely-watched by economists and the industry, partly because it is usually the first to be released every month.
These sales figures are not just adjusted for inflation, which means that growth of 2.7 per cent suggests that the volume of products sold by retailers fell notably. Inflation currently stands at 4.6 per cent in the UK.
November was a key month for retailers because it included two of the biggest shopping days of the year - Black Friday and Cyber Monday. Many retailers heavily promoted the discounts they were offering on Black Friday throughout the month.
Helen Dickinson, chief executive of the BRC, said
“Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November. While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending. Health and beauty products showed stronger growth, but non-food sales were down overall year on year. November had the highest proportion of non-food goods purchased online for 2023, though this remains below the previous year's level.
“Retailers are banking on a last-minute flurry of festive frivolity in December and will continue working hard to deliver an affordable Christmas for customers so everyone can enjoy some Christmas cheer. Looking ahead to 2024, retailers will have to shoulder many new cost pressures, including a rise to business rates, as well as costs from other new regulations. These combined with the biggest rise on record to the National Living Wage will mean retailers will have less capital to invest in lowering prices for their customers.”
The 2.7 per cent rise in November sales compares to a 4.2 per cent increase in the same month a year ago and a 2.5 per cent increase in October.
However, there is more upbeat news from the grocery industry, with Kantar reporting that sales grew 6.3 per cent year-on-year in the four weeks to November 26.
Kantar, which provides marketing data and analytics, said that take-home grocery sales are likely to surpass £13 billion in a month for the first time this December. It forecast that Friday December 22 will be the busiest day for shops.
Shoppers are targeting deals, according to Kantar, with 28.4 per cent of spending on products that are part of offers, the highest rate in more than two years. Sales of own-label products rose by 6.5 per cent, ahead of the wider market, with sales of premium own-label products such as Sainsbury’s Taste the Difference range up by 15.4 per cent. This helped Sainsbury’s to grow its market share in the UK by 0.4 percentage points to 15.6 per cent - its biggest gain in a decade. You can see the latest market share data from Kantar below…
Other stories that matter…
1. Saxo Bank has unveiled its latest annual collection of “outrageous predictions”, which it has developed into something of a tradition at this time of year. Previous predictions from the Danish investment bank have included Brexit, a slump in the value of US markets in 2008, and bitcoin tripling in value. The predictions for 2024 include Saudi Arabia buying the Champions League, Robert F Kennedy Jr winning the US election, and the world being hit by a health crisis because the success of obesity drugs encourages people to stop exercising. You can find the predictions here
2. The growing popularity of craft fairs is providing a new opportunity for small and medium-sized businesses to reach customers, according to a feature by The Observer. You can read that here. Thanks to The Mill, the Manchester-focused newsletter, for flagging that piece. You can find The Mill here
3. Could the bundling of services be a big trend in 2024? It certainly looks that way in the media industry. Verizon and Netflix have agreed to bundle their streaming services together while Apple and Paramount could also combine. Story by Axios here
4. The Wall Street Journal has done a fascinating case study on the rise and fall of Intel, which is facing a battle against other chip makers and designers who have been able to claim an advantage against the US company by focusing on mobile devices rather than computers. These rivals to Intel - which include Cambridge-based Arm - have now developed chips so powerful that they can power computers too. In contrast, Intel - which was once the dominant player in this area - focused on mobile devices too late. The piece says: “This means the threat to Intel comes from a whole ecosystem of companies with deep pockets and sizable profit margins, each trying to take their piece of the company’s market share. In many ways, it really is Intel versus the world—and ‘the world’ includes nearly every tech giant you can name.” You can read that piece here
5. The Transcript newsletter is a useful round-up of what chief executives around the world (mostly in the US) are saying about their business, the economy and other trends during earnings calls. This week the newsletter has done a special edition dedicated to Charlie Munger, rounding-up some of his best quotes. We did a similar version of Off to Lunch last week (you can find that here), but this includes some extra quotes from Warren Buffett’s right-hand man at Berkshire Hathaway, such as this on the importance of adapting: “Part of the reason I’ve been a little more successful than most people is I’m good at destroying my own best-loved ideas. I’m pleased when I can destroy an idea that I’ve worked very hard on over a long period of time. And most people aren’t." You can read more here
Podcast…
The latest episode of our Business Leader podcast features an interview with Alistair Phillips-Davies, the chief executive of SSE, about what it takes to run one of the UK’s largest companies for a decade. The episode also looks at how the UK is really doing with its net-zero ambitions, what happened when an activist investor targeted SSE and why business leaders should be concerned about wet paint.
You listen to the episode on all the usual podcast platforms, including Substack here, Apple here and Spotify here
And finally…
Right Kind of Wrong by Amy Edmondson has been named as the Financial Times and Schroders Business Book of the Year. This book looks at the importance of failure and how to actually learn from it. Edmondson, a leadership and management professor at Harvard Business School, covers how businesses are now keen to develop a culture of failing fast and learning from it because of the success of the Silicon Valley tech giants. However, she warns, failure is unproductive and damaging if you don’t learn the right lessons. You can read more about the book here
On a similar topic, William Hague’s latest column for The Times looks at how the Covid inquiry may be overly focused on holding people to account for failings rather than trying to learn lessons from them. You can read that here
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Best
Graham