Retailers dish up strong Christmas food sales but fashion lags behind

Britain’s biggest supermarkets have toasted a Christmas of strong food spending, but fashion and homeware failed to make headway in a mixed picture for the high street.

Tesco, Sainsbury’s and Marks & Spencer were among those to deliver good news about their festive grocery sales as they enticed shoppers with premium ranges and trend-focused products.

Nicholas Found, a retail expert at consultancy Retail Economics, suggested that households “spent smarter” over Christmas.

However, he pointed to a “stark divide in retail”, saying: “Food retailers capitalised on cautious spending over Christmas, while general merchandise is feeling the brunt of fragile consumer confidence.”

While supermarkets reported strong food spending, their fashion and homeware businesses came under pressure.

M&S partly blamed falling sales in its stores on there being fewer visitors to British high streets.

Sainsbury’s boss Ken Murphy attributed a decline for its non-food and Argos business to consumers opting to hold back when it comes to larger purchases, as well as increased competition from cut-price online players like Shein and Temu.

Meanwhile, Primark owner Associated British Food (ABF) issued a profit warning on Thursday, saying that it experienced “difficult” Christmas trading with sales growth coming in lower than it had forecast.

Fashion and homeware chain NEXT was more of an outlier over the period, having benefited from a nearly 6% rise in UK full-price sales for the nine weeks to 27 December and online shopping surging.

Richard Hunter, Head of Markets at Interactive Investor, said the year ahead will not be “plain sailing” for retailers.

“Higher employment costs and food inflation are constant threats to the sector as a whole and although the probability of an all-out price war between the supermarkets appears to have receded, keen pricing remains a staple in this business,” he said.