NEW. Supermarket sales over Christmas

'Excellent' sales for  Morrisons

Supermarket chain Morrisons has said it had an "excellent" Christmas, with like-for-like sales excluding fuel up 8.2% in the six weeks to 4 January.

The company has been focusing on fresh 

food and promotional offers

The Bradford-based group said its results were helped by its focus on fresh food and promotional offers.

Last week, Tesco said its like-for-like Christmas sales rose 2.5%. Sainsbury's earlier reported a 4.5% rise.

Morrisons said it remained cautious on the outlook for consumer spending, with the market set to stay challenging.

 We believe it will become harder for Morrisons to improve market share in a more competitive market

Freddie George, Seymour Pierce

According to recent data from market researcher TNS Worldpanel, Morrisons reached its highest market share to date in the 12 weeks to 28 December of 11.9%.

"I am pleased with Morrisons excellent Christmas trading, having attracted 2.2 million extra customers with great fresh food and industry leading value," Morrisons chief executive Marc Bolland said in a trading update.

But the group's shares opened slightly lower despite the news.

"We believe it will become harder for Morrisons to improve market share in a more competitive market, which is likely to see greater discounting from Tesco trying to recapture market share," said Freddie George, a retail analyst at Seymour Pierce stockbrokers.

sourced from The BBC

Tesco sees 'challenging' trading Tesco has seen challenging trading conditions
	Supermarket giant Tesco has reported sales growth in line with expectations for the key Christmas period, but said trading conditions were "challenging". Like-for-like UK sales, excluding petrol, rose 2.5% in the seven weeks to 10 January. Adjusting for the lower value added tax rate, sales rose 3.5%. Total group sales rose by 11.6% during the period, helped by overseas growth. The economic slowdown is forcing consumers to cut their spending, notably on non-essential goods. Balance sheet A survey of the UK economy, released on Tuesday by the British Chambers of Commerce (BCC) suggested there had been a "frightening deterioration" in the UK economy towards the end of 2008. While Tesco's UK like-for-like sales growth was the slowest since the early 1990s, Sainsbury's reported last week that it had enjoyed its "best ever Christmas", with sales up 4.5%.  As a business, it's so big that it can cut prices to win customers, and then share the pain of those lower prices with suppliers Robert Peston, BBC business editor	Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "Tesco, once the darling of the sector in analysts' eyes, has somewhat fallen out of favour of late and this update is unlikely to reverse the trend." The figure "will possibly be dwarfed by Morrison's number next week. The aggressive nature of cost cutting by its competitors is clearly giving Tesco food for thought at the current time," he added. But BBC business editor Robert Peston points out that Tesco, as well as selling food, an essential item, has two "enormous advantages" over other firms. "It has a massive and fantastically strong balance sheet - so it is not constrained by the shortage of credit that's mullering smaller businesses," he said. "And as a business, it's so big that it can cut prices to win customers, and then share the pain of those lower prices with suppliers." Overseas growth Tesco, which operates in 13 countries, said its performance had been "against the background of challenging trading conditions in all of our markets caused by the global economic slowdown". The latest figures come after the supermarket saw UK sales growth of 2% in the 13 weeks to 22 November. While UK trading conditions remain difficult, the firm has benefited from international sales, which were up by 32.7%. Sales in Asia were especially strong, up 43%, while European sales grew 24%. The supermarket described online sales as "very strong" in the run-up to Christmas, with tesco.com and Tesco Direct seeing total combined sales up 18% at £273m. Shares in the firm ended Tuesday up 0.4%, 1.3 pence to 351.60p. sourced from The BBC Festive trade cheers Sainsbury's Sainsbury's has said it enjoyed its "best ever Christmas performance" after recording strong sales growth in the last three months of 2008. In the 13 weeks to 3 January, the supermarket group saw like-for-like sales, excluding petrol, rise by 4.5% from a year earlier. Sainsbury's added that 23 December was its busiest trading day to date. Trading was helped by a huge increase in demand for its "basics" range, which saw sales rise 40% from a year ago. Total sales, which includes new store openings, were up 5.3% compared with the same period a year before. Sainsbury's has 509 supermarkets, 276 smaller convenience store outlets and employs 150,000 people. 'Good progress' Despite the better-than-expected trading performance, Sainsbury's chief executive Justin King said the economic environment remained "particularly challenging", and that this was expected to continue in 2009.  Concerns still persist that a highly vulnerable UK economy leaves Sainsbury more exposed than rivals such as Tesco Keith Bowman, Hargreaves Lansdown Stockbrokers The firm said its online sales had risen by 27% during the quarter, helped by a record number of orders in the week before Christmas. Sainsbury's also said that it had enjoyed "good" growth in its non-food business. It said it was "delighted" with sales of Tu, its own-brand clothing range, and said it was now the eighth-largest retailer by volume in the UK clothing market, with a share of 2.3%. "Sainsbury appears to be gauging the mood of UK consumers extremely well," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers. "The group is capitalising on its perceived offering of quality products, combining aggressive pricing promotions in hope of capturing consumers' desire to 'feel good' in the face of an economic downturn whilst reducing expenditure." However, Mr Bowman added that there were worries that price-cutting promotions could hit profit margins. And he added: "Concerns still persist that a highly vulnerable UK economy leaves Sainsbury more exposed than rivals such as Tesco, with its international portfolio." Mixed picture Sainsbury's is the first of the major supermarket chains to report its trading in the run-up to Christmas. Updates from other retailers have suggested that trading over the festive season was not as bad as some had expected. This week, Marks and Spencer, Next and Debenhams have all reported a fall in like-for-like sales over the festive period, but the declines were not as bad as had been feared by some. More retailers issued their Christmas trading updates on Thursday: Discount fashion retailer Peacocks said like-for-like sales for the two weeks to 3 January had jumped by 22% from a year ago, and announced plans to open up to 50 new stores over the next two years creating up to 750 jobs. The privately-owned chain already has 526 stores • Department store group House of Fraser said like-for-like sales had fallen 1.5% in the five weeks to 3 January, but added that its profit had increased over the festive period • Fashion brand Ted Baker said total sales from 1 November to 24 December had risen by 7.2% from a year ago, but said it expected full-year profit to be at the lower end of market expectations • Wine warehouse chain Majestic Wine said UK like-for-like sales had dropped 2.9% in the 10 weeks to 5 January, with champagne sales falling. sourced from The BBC

What are you giving up in the downturn?

It has been a tough December for retailers, and grocers have not been spared in the downturn.

But it is not just that overall sales are falling.

Canny consumers have been trying to make their money go further and that has meant changing the way they shop.

BAKED BEANS SALES GROWTH August 18.1% September 8.8% October 6.4% November 21.7% December 22.6% Sales value compared with same month of 2007 Source: Nielsen Scantrack

Many of the lost sales suffered by retailers will not be from people who were considering buying something and then decided not to.

They are just as likely be from customers considering buying one product and then instead, buying a different one.

So, while sales on the whole were falling in December, baked bean sales, for example, rose 22.6% in December, compared with December 2007, according to figures prepared for the BBC by the market researchers Nielsen.

A factor that might cause such a rise would be people foregoing a more substantial meal in favour of a cheaper alternative such as beans on toast.

There are certainly signs that they have been buying the bread for the toast.

Premium breads

December figures are not yet available, but sales of standard white sliced bread rose sharply earlier in the year, with increases of 2% in November, 15.2% in October, 20% in September and a staggering 55% in August.

We're starting to see more of a stay-home economy Charles Davis, Centre for Economics and Business Research.

Products that people buy more of if they have less money are called inferior products, which is an economic term and is not casting aspersions on its quality.

White sliced bread is a classic inferior product; as people's incomes rise they tend to have a smaller proportion of staple products such as bread and rice in their diets.

They also tend to move away from standard white sliced loafs and towards premium breads such as seeded loaves, croissants and bagels.

Some other products show a more complicated picture.

Sales of sparkling wine fell by a relatively moderate 2.3% in December, but the sparkling wine figure excludes the more expensive champagne.

Champagne sales fell 10% in the month, suggesting some people who would have bought champagne are trading down and buying sparkling wine instead.

'Stay-home economy'

The same may be true for olive oil, which used to be considered as a luxury product, but which showed sales growth of 6.5% in December, compared to the same month one year ago.

The Soil Association is confident people will continue to buy organic products

Have our preferences changed so much that olive oil is now a basic staple, or are there other factors at work here?

It may be that consumers are sufficiently convinced of the health benefits of olive oil to be prepared to continue spending on it and are instead cutting back elsewhere.

Alternatively, it may be that people are trading down from ready-made dressings and are mixing their own as a cheaper option, or perhaps it is a result of people eating out less and cooking at home instead.

"We're starting to see more of a stay-home economy," says Charles Davis from the Centre for Economics and Business Research.

"People are trying to find a cheaper way of doing things and are looking to prepare things at home."

Other signs of people seeking cheaper ways of doing things can be seen in figures for sales of supermarkets' own 'value' brands.

Sales in this category were around 30% above the same month the previous year, every month from August to November.

"Budget own labels are big news at the moment and I expect to see solid growth in these all year," says Danielle Tolson from Nielsen.

"Retailers will put more support behind their own label lines and they will also introduce more as the recession continues, so growth will be strong."

'Deep green customers'

In contrast, the figures for sales of organic products suggest that they may be regarded as luxury goods by consumers.

Total organic sales fell by 11% in December, which Peter Melchett from the Soil Association says reflects the very difficult situation the country is in.

But he predicts that organic sales are going to hold up relatively well in the downturn.

Its research, "identified that the most deep green organic consumers (who buy the majority of organic products) will continue to do so, because they understand the benefits that organic food and farming delivers not only for them and their families, but also the planet", he says.

He adds that direct sales through organic box schemes are still growing.

More to come

As the country goes through a recession there will be winners and losers.

We have already seen impressive growth from discount retailers while the big supermarkets have put money into value brands.

In the coming weeks, BBC News will be looking in detail at how some other sectors of the economy are faring, going behind the broad economic data.

There will be analysis of sectors such as transport, communications and the DIY market.

sourced from The BBC