It was another bleak Black Friday last year as the number of shoppers and transactions in the UK and across the globe dropped below the figures on the same day in 2022. But compared to the equivalent Friday in October, Black Friday was considerably busier with transactions up by 2.7%, demonstrating the popularity of the shopping extravaganza.
In December, overall volume of retail sales fell by 3.2% according to the Office of National Statistics (ONS). The drop is attributed to a number of factors, including consumers doing their Christmas shopping early (including on Black Friday) as well as high prices and borrowing costs, and the continued impact of economic pressures on household budgets. Heather Bovill, deputy director for surveys and economic indicators at the ONS, described December's fall in retail sales as ‘the largest overall monthly fall since January 2021, when the reintroduction of pandemic restrictions knocked sales heavily’.
Shoppers were also spending money less on goods, and more on leisure, entertainment, getaways, consumer booked experiences and digital subscriptions. Spending on entertainment and travel soared by 12.3% and 14.1% respectively, with airlines and travel agents doing particularly well.
For the fashion industry, the results are mixed. Some high street retailers such as Next and Primark reported strong results over the festive period. Others, including clothing brand Quiz, saw sales plunge. High end fashion firms are still facing slowdown as a result of rising inflation and economic uncertainty. Burberry, for instance, reported a drop in sales of 7% in the quarter, whilst British designer bag maker Mulberry warned that the loss of VAT-free shopping may be to blame for its revenue, which fell by 8.4% in the run up to Christmas. Brian Duffy, chief executive of Watches of Switzerland, said that it had ‘experienced a volatile trading performance in the run-up to Christmas’ after the group’s shares fell more than 30% following a profit warning. Radley, Pandora and Barbour on the other hand have all defied the slowdown and reported increased sales of 4%, 9% and 20% respectively.
Overall, retailers are preparing for a ‘challenging’ 2024. Helen Dickinson, chief executive of the BRC, suggested that ‘weak consumer confidence continued to hold back spending’ over Christmas. But there may be hope on the horizon as analysts have predicted sales to improve in 2024 as wages increase and inflation declines, although the effects are not thought to be felt until the summer. In any case, it is clear that both affordable and luxury brands are worried. Chanel, for instance, is said to be bracing for a ‘tougher’ 2024 – its president of fashion commented that ‘luxury is not protected from the economy’ and ‘can’t be in permanent two-digit growth’.
Luxury department store, Liberty, is widening its range of own-brand products with hopes of expanding its business. The British retailer’s own label is among its best-performing lines, and plans to launch a full beauty offering alongside existing own-brand accessories, jewellery, homeware, womenswear and menswear sections. The news comes as department stores increasingly aim to capitalise on in-house products which have more generous margins, against a challenging market for luxury fashion.
Meanwhile, at Fortnum and Mason year-on-year sales rose 17% in the five weeks leading up to Christmas. However, CEO Tom Athron noted that many of its customers were spending less and ‘trading down’. He credits sales growth to putting the focus back on food and appealing to a domestic shopper base.
Others have not fared so well. Fenwick’s New Bond Street flagship store is finally set to close in early February, ending 133 years of trading. Plans to close were first announced in December 2022, having sold the building to property developer Lazari Investments for £430 million. Lazari intends to convert the store into an office-led mixed-use development which will still include a retail offering, given the store’s location on one of the world’s most popular luxury shopping streets.
Harrods MD, Michael Ward, commented that ‘reinvention’ of the iconic Knightsbridge store, particularly across womenswear, was one of three key areas of focus for 2024. The other two are understanding and adapting to customer needs, and global expansion. It follows the recent opening of Harrods’ first private members club, The Residence, in Shanghai in mid-December. The move was perhaps to be expected given that Chinese consumers are reported to make up to 16% of the British retailer’s sales.
The world’s biggest luxury group, LVMH, has seen several executive shifts in recent weeks. Michael Burke, former CEO of Louis Vuitton, will succeed Sidney Toledano as chairman and CEO of LVMH’s Fashion Group (which oversees all of the company’s fashion houses). Burke has spent decades of his career at the conglomerate and has helped shape its fortunes. Toledano will remain as a personal advisor to CEO Bernard Arnault.
Arnault is to nominate two more of his sons, Alexandre and Frédéric, to the board of LVMH, joining their two siblings already on the board and further consolidating the family’s control over the fashion house. The family own more than 48% of LVMH shares and 64% of voting rights. Arnault’s children all work in different roles in the group, with Frédéric also having been appointed as chief executive of LVMH’s watches division. The latest shifts are being closely watched for future succession-planning, the question being who will eventually replace Arnault at the helm.