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• With a few days left of pre-Christmas trading, 70% of on-food retailers are currently on sale
• This is virtually the same as last year – the major difference being this year’s far greater cost pressures which very few are managing to pass on to their customers

• Fashion is the major driver of this week’s index hike. Last week 56% of fashion was on sale. This week it’s 74%
• Th premium sector across non-foods has jumped on the bandwagon – last week’s 38% have hit 50% this week

• Post Christmas we will see in the index move through the 80s and into the January Sales
• With 64% of retailers on sale throughout 2017, the impact of the traditional “January Sale” has been materially diluted

** We advise retailers and the financial community, and track promotions by sector and company – for details contact admin@richardtalksretail.co.uk

My impression is that Christmas trading is as cold as the weather. Over many years I have learned that trading over the months leading up to December are a strong guide, and this year has been weak.

My sense is that footfall has been relatively weak. And that footfall is never shared equally, or even proportionately. Visiting stores today. John Lewis is reasonably busy. If its footfall is 100, M&S stands at around 75. I estimate Debenhams at c35 and House of Fraser at c20. I spend lots of time walking stores throughout the year and in a variety of locations. I would say these relationships are not too different from the rest of the year, except M&S’s footfall is materially higher now – a slightly better Christmas might be on the cards for them.

Meanwhile, today we learn that inflation is up to 3.1%. This tells us something about what the retail results season might look like as 2018 unfolds, and it wont be good. Over this period the pound has devalued by c15%. The fact that retail has only managed to increase prices by some 20% of this figure underlines just how pressured the industry is right now. Some of the cost will have been shoved back up the supply chain to suppliers but this has product quality implications. How many retailers can risk reducing the quality of what they sell?

We have already seen signs of industry stress in recent weeks with some administrations, some credit insurance worries and stories about cash flow concerns. However weak Christmas trading is, this will still be the cash flow peak for most retailers. These stress levels can only increase in Q1 2018.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

This morning’s news of the takeover of Intu by Hammerson is very positive. I have been warning of the inevitable consequences of relentless capacity expansion for well over 10 years and found the real estate side of the retail industry the slowest to understand. This deal involves two companies that get it and have the vision and courage to act.

Today, 23% of non-food sales already goes through online, a channel that has grown from zero in more less 15 years. In the bricks and mortar world, trading space has continued to expand, albeit at a progressively slowing rate. However, online has failed to materially make the spending cake bigger. With consumer spend in retail more or less flat, something has to give. The industry is seriously over-supplied, and getting more so by the month. The vast majority of retailers have too many stores and one way or another, this has to change.

I think this deal recognises reality and its implications. The enlarged company will be better able to take some tough decisions on editing capacity. It will also be better placed to deal with the implications of retailer distress that will characterise next year’s market. I expect to see more casualties, administrations and CVAs. The enlarged business will be much better placed to play a pro-active role in this reconfiguration of industry capacity.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

The company’s just announced shop-in-shop trial in the Surrey Quays Tesco is the biggest surprise since Next announced it would run a Black Friday promotion. The fact that both these initiatives are very small should not mask their significance.

This is the most challenging retail market we have ever seen and is THE defining time for the industry. The defining bit will take some years, but it has started. And no one is immune – everyone is feeling the pinch. Different companies deal with pressure very differently. Ironically, it is often the strongest who find it toughest because they are so unused to facing challenge. I think we are seeing this at Next.

Doing Black Friday is very out of character for a retailer that has prized price integrity so highly. In the most promotional market ever seen, they stood firm, only running sales to clear seasonal stock. It is hard to imagine what the business learned from a very limited trial and all in all, I wonder what the point was.

This latest trial is just as hard to fathom. The two retailers make strange bedfellows. Next has seen what Arcadia has done with Tesco and has determined that this is an attractive strategic opportunity. I admit to being shocked!! Given the underlying declining sales performance at Next stores one would have thought that opening more space didn’t rank high on their to do list.

Over the past 10 years or so, Tesco’s customer focus has narrowed. This is reflected in its ranging. The upper reaches of its “Best”offering have been generally pared and often , edited out altogether. They may have made for a better partner 10 years ago but now, I’m far less certain. Indeed, I’m far less certain that Next sits comfortably in any kind of supermarket at all.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

• Retailer participation in this year’s Black Friday was a whisker ahead of 2016

• Our YoY promo tracker mostly ran slightly below last year but converged yesterday
• Participation by sector was lowest in departments stores (70%), Jewellery (54%) and General Merchandise (60%)

• The YoY pattern has been very close all year so the run-in to Christmas is very clear
• Next week, promotional activity will fall but remain well above 50% of the industry, beginning to rise again by week 50

** A more detailed Paper analysing  at company level is available – email admin@richardtalksretail.co.uk for your copy