Business

London Briefing: Christmas 2018 one of the toughest for retailers in years

Consumer confidence crumbles and Piers Morgan puts a vegan sausage on the menu

The filling in Greggs’ new vegan sausage roll is made out of the company’s own bespoke Quorn filling. Photograph: Christopher Furlong/Getty Images

Fiona Walsh
Wed Jan 9 2019 - 05:31

Britain's hard-pressed retailers are queuing up to deliver news of how they fared over the festive season, culminating in "Super Thursday" tomorrow, bringing updates from, among others, Marks & Spencer, Tesco, John Lewis, Debenhams and Mothercare.

This has been one of the toughest Christmases in years, as consumer confidence crumbles against the toxic backdrop of Brexit. So far, surprisingly perhaps, there have been more winners than losers in the retail sector, although the bulk of the results are still to come.

Winning in this sort of market is a somewhat relative term, however. As demonstrated by the collapse of entertainment retailer HMV just days after December 25th, simply staying in business might be regarded as a good result.

The festive reporting season was, as usual, kicked off by Next, which released its figures last week. Analysts placed the group firmly in the winners’ enclosure after a late surge in online sales saved the day. While sales at its stores chain fell by more than 9 per cent, its extensive – and impressive – online operation raced ahead by more than 15 per cent.

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More importantly, these were full-priced sales. Next chief executive Lord Wolfson once again held his nerve ahead of Christmas, refusing to engage in the discounting frenzy that swept through the sector, shattering margins in its wake.

While Next has been declared a Christmas winner, its profits will still fall this year, to about £723 million (€803.3 million), and again in the year to January 2020, where current estimates point to around £715 million. This would be the group’s fourth consecutive year of profit decline, although the unknown quantity of Britain’s departure from the EU makes forecasting in any sector extremely difficult.

Many retail sector watchers had feared that poor trading at Marks & Spencer and department stores group Debenhams might force them into profit warnings before their scheduled trading updates. Under City rules, companies are obliged to inform the market if it should become apparent they will miss analysts’ expectations by a significant factor, usually about 10 per cent.

But the silence from both groups has at least allayed fears of a total disaster. Having said that, their figures will not make pretty reading tomorrow. Next is widely regarded as the best-run retailer in the business; M&S is not. So if Next has struggled with bricks and mortar sales, the challenge will have been even greater for its older and less successful rival.

Piers Morgan gets his teeth into ‘vegan bloody sausage’

Has there ever been so much fuss about a simple sausage roll?

Since it was founded in Newcastle upon Tyne almost 80 years ago, Greggs has become not only the nation's biggest bakery retailer but also a much-loved British institution, famed for its sausage rolls and savoury pastry bakes.

Its chain of unpretentious shops totals more than 1,850 nationwide, including a growing presence in Northern Ireland.

The launch last week of a vegan version of its most popular product should have been just another marketing move but rapidly took on a life of its own, as politicians, Twitter celebrities and others piled in to give their views.

Kicking off the controversy was Piers Morgan, who accused Greggs of being “PC-ravaged clowns”. Nobody was waiting “for a vegan bloody sausage”, he tweeted.

“Oh hello, Piers,” the baker fired back via its official Twitter account. “We’ve been expecting you.”

Cue a Twitter storm involving everyone from MPs to social commentators, food experts, customers – vegans, vegetarians and carnivores alike – all ensuring maximum publicity for the latest addition to the Greggs range.

Comment articles were written, including the Guardian's tongue-in-cheek (probably) contribution under the headline: "Half-baked: what Greggs' vegan sausage roll says about Brexit Britain."

Brexiteers did manage to get in on the act, as flag-waving, pro-leave protesters were pictured outside a Greggs branch in Manchester. Initial reports that it was an anti-vegan demonstration were later debunked – the Brexiteers had simply stopped outside the shop for a rest.

The truth is that the whole daft episode, deftly handled by Greggs’ savvy media team, provided a welcome distraction ahead of the inevitable post-Christmas return to Brexit gloom.

The £1 vegan version of the sausage roll (10p more than the 90p meat version) is available in only about half of Greggs stores at the moment but, amid numerous reports nationwide that they have been selling out before lunchtime, will no doubt be extended to the full chain before long.

Greggs will be updating the City today on how it fared over the Christmas period. But you can bet sausage rolls will be at the top of the media’s menu.

Fiona Walsh is business editor of theguardian.com

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