LONDON (Reuters) – A Christmas crunch inflicted more pain on British retailers on Thursday, as changing habits and belt-tightening exposed the industry’s struggle to eke out growth and its slim margin for error.
One of Britain’s best known chain stores John Lewis [JLPLC.UL] warned it was one of the “most severe” markets in a generation, Marks & Spencer’s described conditions in clothing and homeware as “challenging” while Britain’s biggest retailer Tesco said the market was subdued.
Industry data on Thursday showed British shoppers cut back at the end of 2019, rounding off the worst year since the mid-1990s for retail sales amid uncertainty over Brexit, last month’s election and slowing wage growth.
Instead of buying goods, consumers opted to spend on experiences, according to payment card company Barclaycard showed. Cinema ticket sales were up 19%, while spending in pubs and on takeaway food rose by about 12%, its data showed.
Adding to the downbeat outlook, Tesco said Prime Minister Boris Johnson’s resounding election victory in December, which broke the deadlock over Brexit and lifted financial market sentiment, had not unleashed any pent-up demand.
On Wednesday, Sainsbury’s, Britain’s second largest supermarket, said it hadn’t seen any change in behaviour since the nation went to the polls.
The data and lacklustre trading updates from the UK’s best-known stores will underscore concerns that the prolonged downturn in consumer spending will last longer than feared.
M&S and Tesco highlighted the unforgiving nature of a market in which retailers have to get the right products available at exactly the right time in order to find any growth.
M&S saw quarterly underlying UK sales rise for the first time since 2017, but its festive season was tarnished by basic mistakes in managing clothes supplies.