Despite the admitted challenges and competition facing big retailers in the UK, especially the rise of deep discounters, some are doing quite well.
Marks and Spencer, which had its share of struggles before and during the COVID-19 pandemic, has shown particular resilience with a stunning 7% boost from its M&S Food Division during the Christmas period, one of the best performances of any supermarket in the UK.
“Thank you to our customers for shopping with us and to our colleagues who worked incredibly hard,” said Stuart Machin, M&S Chief Executive Officer. “In Food, we led the market on volume growth every month across the quarter and served more customers than ever before. Core categories grew strongly and renewal stores, which cater to larger basket shops, performed particularly well, as more customers looked to us for more of their full shop.”
According to M&S, Food sales rose 10.5% over the 12-week period, with like-for-like sales just a tick below at 9.9%. Officials credited the work of supply chain partners, availability of fresh food including fruit and vegetables, and its own “innovation and quality upgrades.” It’s Remarksable value range, in fact, jumped by 18% year over year.
But like all retailers heeding to the ebbs and flows of a still unstable economy, M&S did temper future results in its quarterly report.
“As we enter the new year and FY25, expectations for economic growth remain uncertain, with consumer and geopolitical risks,” Machin said. “We also face additional cost increases from higher than anticipated wage and business rates related cost inflation. Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.”
Machin was up front about what he believes did drive its success during that 13-week period leading to Dec. 30 and will be a factor in the future.
“In Food, we inflated below the market, with quality perception increasing further,” he said. “Our vision is to be the most trusted retailer, doing the right thing for our customers, with quality products at the heart of everything we do, and we are just at the beginning of what we can achieve. Lots done, lots to do, lots of opportunity ahead.”
Across the market
Meanwhile, Sainsbury’s enjoyed 9.3% growth from its grocery sales in the 16 weeks ending the first week of January, with Christmas grocery sales just under that at 8.6%.
“We’ve worked hard to really deliver for our customers this quarter and have grown grocery volumes ahead of the market for the fourth Christmas in a row,” said Simon Roberts, Chief Executive of J Sainsbury plc. “We enter 2024 with strong momentum and next month we will share our updated strategy, building on all we’ve done to put food back at the heart of Sainsbury’s over the last three years. There is a lot to be excited about and we remain absolutely committed to deliver for our customers, colleagues and shareholders.”
Sainsbury’s said it saw strong performances from fresh food, including fruits and vegetables. Like M&S, availability was crucial to that success for Sainsbury’s and others, including Tesco.
Big retailers are all trying to position themselves as well as they can against each other and vs. Aldi and Lidl – trying to make inroads on sustainability and food waste; price-matching against those discounters on hundreds of products; and by increasing wage growth, although the last item is still up for debate, despite many of them talking up surpassing ‘record’ wage benchmarks. For many hourly workers, their pay still can’t meet cost-of-living increases, inflation, or food prices, which continue to outpace their earnings.
Unite, the largest workers’ union in the UK and Ireland, released a statement Thursday, calling out Tesco specifically for being “a profiteering gravy train” after Tesco said in its outlook it now expects “retail adjusted operating profit of c.£2.75bn …. resulting in strong retail free cash flow generation of around £2.0bn.”
Unite general secretary Sharon Graham said, “At a time when food prices continue to rise and millions of people are still struggling to feed their families, Tesco have been raking in bumper profits on the back of profiteering. Corporations like Tesco have done very well out of the cost-of-living crisis, unlike working people who have had to swallow inflated costs that have lined the pockets of the bosses and investors.”
According to a recent report from RTE, Tesco did boost pay by at least 4% for many of its hourly workers in Ireland at the start of the year. Last year, Tesco raised hourly rates in the UK for store colleagues to £11.02 and £11.95 in London.
However, both of which are just slightly above minimum wage. This April, the national minimum wage for those 21 and over will rise to £11.24 and more than £13 per hour in London.