In UK, 194 retailers collapsed into administration during the 2012, which caused in the decrease in ten to thousands of jobs along with the JJB Sports and Comet losing their brand names, according to Deloitte.
For Tesco, the Christmas sales had been disappointing and were forced to issue the retailer’s first profits warning in more than 20 years according to Tesco chief executive.
On January 12, 2012, which is also called as “Black Thursday”, the retailers said that the shares in Tesco collapsed by 16pc, J Sainsbury by 5.4pc, and Wm Morrison by 6pc.
Next and John Lewis, the biggest retailers to have reported that the sales rose compared with last year as the spending of the consumers were held back.
As per the survey, Morrisons, a retail company is under loss mainly because of not having a presence in the fastest growing online and convenience-store sectors. Hence, Morrisons is under pressure as compared to the last year when it was one of the best performers at Christmas. The company should acknowledge the problems and solve the problem rather than fire-fighting to protect an unsustainable level of profit according to Philip Dorgan, an analyst at Panmure Gordon.
Last year’s profit warning from Tesco forced Philip Clarke, CEO of Tesco plc to launch a £1bn turnaround plan, which involved hiring more staff, re-launching Tesco Value as Everyday Value and revamping stores with a greater focus on food. And because of this plan, Tesco could outperform Sainsbury’s in terms of like-for-like sales for the first time in three years.
According to Clive Black, analyst at Shore Capital is expecting sales growth of between 0.5pc -1.25pc for both Tesco and Sainsbury companies, but with Tesco ahead in food sales.
Sainsbury’s, the London-based supermarket sales growth in the previous three months is reported to be below 1.9pc, according to Justin King the chief executive of Sainsbury.
The like-for-like sales in Sainsbury’s core stores could be down more than 4pc, in terms of adding sales, the internet, extensions and convenience, since Sainsbury is suffering because of the change in sales from highly profitable large stores to less profitable convenience stores and the internet, according to Dave McCarthy, analyst at Investec.
For Marks & Spencer, analysts at the Japanese bank have forecast that the food sales will increase to 0.5pc in its third quarter, but general merchandise sales, which include clothing, will be down 3.5pc on a like-for-like basis.
Because of the developing mobile phone technology and the widespread launch of click-and-collect, online shopping reached new levels of importance for retailers at Christmas.
Online now accounts for more than a quarter of its sales, and Kantar data showed that online fashion sales grew by 18pc in November, compared to 7pc in 2011according to the details given by Next.
With an online presence, Christmas results are showing a robust performance for retailers, in particular those who could use their stores to leverage this through click and collect according to Christine Cross, chief retail and consumer advisor to PricewaterhouseCoopers and a non-executive director at Next.
Due to the rise of online sales, the retailers such as HMV, Argos and Dixons are battling to adapt to the new world and survive. This has caused mainly because of structural dilemmas in non-food sales.
Tesco and Sainsbury’s are likely to report strong internet and convenience growth. If these companies will have growth, then the sales of large stores such as Morrisons will fall. According to the estimates made, Tesco and Sainsbury’s have underlying 3pc to 5pc volume declines in core stores which are closer to Morrisons, according to Dave McCarthy at Investec.