Retailers of food and drink are weathering the storm of tough trading conditions better than their counterparts in other sectors, according to business adviser and accountancy firm Grant Thornton.
Although the percentage of negative trading statements among retailers are running at a record high, food and drink stores are faring better.
The Grant Thornton Quoted Retail Companies Index for Q4 2008 found that 27 per cent of retailers posted negative trading updates during this period up from 22 per cent in Q4 2007, although the number of positive statements at 31 per cent is the highest since Q1 2008. This is a clear indication that the most efficient retailers are riding out the storm well and are benefiting from the downturn that some of their competitors have experienced in the last three months.
David Bush, head of Grant Thornton's retail services team said food and drink retailers continue to perform markedly better with 67 per cent issuing positive statements in Q4, versus 20 per cent for non food and drink retailers. J Sainsbury’s, Tesco and Morrisons have all reported an increase in sales with both Sainsbury’s and Morrisons reporting positive trading statements. Overall, food and drink retailers have reported an 83 per cent increase in sales in the last quarter. But this is still a fall from the same period last year when there was a reported 100 per cent increase in food and drink sales.
Bush said: "These results imply that the Christmas trading updates will be extremely gloomy with even the stronger retailers struggling for sales. Therefore, the retailers likely to succeed in 2009 will be those that hold onto market share without seriously damaging gross margins in the process whilst continuing to provide product to consumers which is underscored by perceived value.”
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