Online rush sees John Lewis profits surge
A surge in online shopping on Christmas Day helped John Lewis post a stunning 31 per cent rise in total sales last week, as "pent up demand" created by the earlier snowfall unleashed an eleventh-hour deluge of customers into its department stores.
However, the 32-store retailer remains more cautious about the outlook for consumer spending next year, while the British Retail Consortium (BRC) said two-thirds of chains expected sales to fall in 2011 as the rise in VAT, continued pressure on household budgets and brutal jobs cuts in the public sector hit shoppers hard.
John Lewis said it expected to enjoy "strong" clearance sales in its stores from today, following an explosive start to the same event online from 5pm on Christmas Eve.
The online clearance started with a record one-hour period on Friday and John Lewis's website enjoyed a massive 45 per cent increase in sales on Christmas Day, helped by visitor numbers to its website up by a quarter.
Maggie Porteous, the head of selling operations at John Lewis, which along with the grocer Waitrose forms the John Lewis Partnership, said: "There was a peak between 9pm and 10pm on Christmas Day after the kids had gone to bed and a dip between 1pm and 4pm as everyone was tucking into their brussels sprouts."
The most popular purchases on its website included feather pillows, luxury white towels, guest beds, LCD televisions, Molton Brown bath and shower sets, and laptops.
For the week ending at midnight on Christmas Day for online and Christmas Eve in its shops, John Lewis grew sales by 30.6 per cent to £97.1m. Ms Porteous said: "There was some pent-up demand from the snow, and the slight thaw in the weather released that."
In time-worn tradition, hordes of men rushed to buy last-minute gifts, particularly in John Lewis's lingerie, gift food and beauty departments.
In fact nine of its stores enjoyed record pre-Christmas day sales, while its three stores in central London had their best-ever day of trading last Thursday.
However, John Lewis's total sales were helped by six days of trading last week, compared with just five last year when Christmas Day fell on a Friday.
Waitrose, the group's grocery chain, also delivered record festive trading, driven by underlying sales jumping by 5.4 per cent between 1 December and 23 December.
However, the John Lewis chain, which has regularly delivered double-digit weekly sales growth this year, is expecting more modest rises next year. Ms Porteous said: "The VAT rise will take place and a lot of economic factors will make people more cautious about spending."
Meanwhile, according to the BRC's Retail Prospects for 2011 survey, 64 per cent of chains expect sales to fall next year, with 18 per cent forecasting an improvement and the same proportion predicting trading will stay the same as 2010.
Its survey found that almost three-quarters of retailers expect the price of goods to rise in 2011. They also cite "weak consumer demand" as their biggest concern for the year ahead.
Stephen Robertson, the director general of the BRC, said: "Our snapshot shows retailers expect a difficult December to be followed by a tough 2011. They believe the VAT rise will contribute to higher prices and, with fears about Government cuts and the wider economy, people will be put off spending."
Despite this pessimism, 47 per cent of retailers say they plan to increase staff numbers this year, partly because of planned new stores, with 29 per cent expecting to keep staff levels the same and 24 per cent intending to headcount. In another fillip for the sector, 41 per cent of chains expect to increase investment over the coming year, compared with 24 per cent expecting no change and 35 per cent which foresee reduced investment.