John Lewis confirms new pattern to Christmas trade

Department store chain John Lewis today announced sales figures showing the impact Black Friday discounting had on its 2014 Christmas trading.

Managing director of the business, Andy Street, spoke of a "new shape" to Christmas trading, defined by an early peak at the end of November driven by deals and money-off incentives, and then a last-minute gift buying rush.

Black Friday (28 November) week yielded the biggest seven days for sales in John Lewis's 150-year history, but comparative trading for the Christmas week and the one preceding it were actually down on 2013.

"With Black Friday driving a higher proportion of online sales and customers increasingly wanting more convenience, this has meant a real concentration on fulfilment, making this a truly 'Logistics Christmas'," Street explained.

"The investments we have made and the new capabilities we have built in recent years in Distribution and IT have been fundamental in ensuring we successfully navigate this changing shape of trade."

For the five weeks to 27 December, total sales were £777 million, which represented an increase of 5.8% compared with last year, or +4.8% on a like-for-like basis. Online sales were up 19% on last year, while click & collect overtook home delivery as a method of fulfilment this Christmas – with 56% of online orders for the period collected in a shop.

The department store chain has been growing strongly and outperforming the wider retail market in recent years, and finds itself in a position to deal with unusual trading behaviour from a logistical and cash-flow perspective. However, the atypical purchasing behaviour caused by a flurry of money-off deals before December could cause problems at less stable retail organisations.

Results will become clear in the coming weeks as retailers announce their festive trading performances, while Next made the strategic decision not to get involved in heavy markdowns around Black Friday at all. The high street fashion and homeware retailer was still rewarded with a 2.9% year-on-year sales rise for the period between 28 October and 24 December.

Neil Saunders, managing director of retail research group Conlumino, said: "In many ways, this Christmas shows that John Lewis is one of the retailers coping well with the new model of retailing.

"Its investments and innovations have given it the flexibility to deliver in changing times."

Commenting on the wider industry, Sophie Bevan, head of retail & wholesale at professional services firm BDO, added: "It's no surprise that retailers are beginning to see the knock-on effect of Black Friday.

"While the heavy discounting in November brought instant returns, what we are seeing is that Black Friday has inhibited the traditional Christmas sales in December. While we will not see the real cost that these heavy promotional activities have had on margins until the post-Christmas reckoning of results, it wouldn't be surprising if a few retailers are nursing a new year headache."

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BDO Retail & Wholesale