Shoppers desert the high street: Morrisons, Tesco and Marks & Spencer reveal disappointing Christmas sales

It was the Christmas when customers decided to order online – which was bad news for some of the country's biggest retailers

The true extent of Britain's changing high streets was laid bare yesterday as three of the biggest retailers revealed disappointing Christmas trading following a sea change in customer habits which severely dented sales.

For Morrisons, Tesco and Marks & Spencer it was very much the same old story: customers are more demanding, have less to spend and are determined to use the internet in ever-increasing numbers. But this year appears to be the first time so many large retailers have been damaged by the changes.

Morrisons suffered hardest, as shown in its unexpected mini profit-warning announced 11 days earlier than expected. Sales plummeted by a shattering 5.6 per cent in the six weeks to 5 January compared with a year earlier, even though this year the supermarket had two extra trading days, opening on Boxing Day and New Year's Day for the first time.

Its under-pressure chief executive, Dalton Philips, blamed the lack of convenience stores and online presence for the fall, and said he would need more time to turn around the company's fortunes as the 85 convenience stores opened during the last 12 months turns into 200 by next year.

He said: "Since I've started we've been going as fast as we can to turn around the antiquated systems inherited. We had no online business or convenience stores, cash was still counted by hand, and our loyalty scheme is paper-based rather than electronic.

"If you look at our competitors, Sainsbury's and Waitrose, online and convenience is where the growth is coming from," he added.

Morrisons' first online grocery delivery, following a £218m link-up with Ocado, will take place this morning, 15 years after Sainsbury's maiden order, with Mr Philips ringing the doorbell.

"More time" is a familiar call from chief executives under pressure, and was whipped out by both Tesco's boss, Phil Clarke, and Marks & Spencer's chief executive, Marc Bolland.

At Tesco, the supermarket suffered a similar fate to Morrisons – namely that customers were not shopping at its big stores any more, preferring to put their feet up with their smartphone or tablet and order from the sofa. But Tesco has the distinct advantage of one of the biggest online groceries businesses in the world – with 50 per cent of the UK market – and nearly 2,000 convenience stores, giving an indication of how far off Morrisons is.

It meant that Tesco's sales fell 2.4 per cent on a like-for-like basis in the six weeks to 4 January, but Mr Clarke admitted that if it wasn't for the website and convenience stores, they would have fallen by double-digit percentage points. He could also rely on the Clubcard data which has helped Tesco so much in the past.

"What surprised and disappointed me was how slow it was at the beginning of December, which meant we have to be harder on discounts and use data like our Clubcard even more."

Morrisons does not have the same luxury, with its rudimentary loyalty schemes still paper-based, with next to no data on individual customers – another issue that Mr Philips says he wants to address.

Meanwhile, over at M&S, Mr Bolland also asked for more time to turn around the flagging fortunes that saw general merchandise sales down 2.1 per cent, which was worse than expected but appeared to show some improvements in the final month of the year.

A new web platform for the business will be launched later this year, and hundreds of millions have been ploughed into distribution systems to keep up with the competition.

But he is still far behind rival Next, which reported an unprecedented 11.9 per cent rise in sales and has the benefit of its Next Directory catalogue with all the data on customers that brings.

Even the big winners of Sainsbury's, John Lewis and Waitrose have admitted just how important the web continues to be. Sainsbury's also suffered a similar fate in its bigger stores to Tesco and Morrisons with customers shopping elsewhere.

That importance was highlighted by the British Retail Consortium, which revealed that online sales soared by 19.2 per cent in December. It means 18.6 per cent of all Christmas sales were made online, up from 16.5 per cent last year, with health and beauty growing fastest, and clothing not far behind.

The phone giant O2 also found that one in three customers used click and collect, and calculated that if Mothercare, which issued a profit warning, and similar-sized businesses improved their multichannel offering, they could boost sales by £66m a year.

David McCorquodale, the head of retail at KPMG, said: "With one in five items bought on the internet in December, this really was an online Christmas for the retail sector. The winners this Christmas were those retailers with slick multichannel operations, who could offer consumers the flexibility to shop how, and when, they want to."

Compare this with overall sales growth of 0.4 per cent in December and the importance of online becomes apparent.

The high-street bosses constantly feel aggrieved that they are suffering at the hands of online-only rivals, and are calling on the Government to do more, such as reduce business rates.

That call is starting to be heard – with the Government offering a business rate cap of 2 per cent and Labour now signing up the businessman Bill Grimsey to tour the country and report back to them.

And if the Christmas numbers are anything to go by, those moaning retailers might finally have a case.

Festive facts: Five things we learned this year

1. Christmas came "later" than ever before. Shoppers had three full weekends and the final Monday 23 to stock up. Online shoppers used click and collect to the max.

2. Retailers lost the cat and mouse game over discounting. It averaged 46 per cent versus 42 per cent last year. Some offered as much as 75 per cent off before Christmas and suffered as a consequence.

3. Leading supermarkets were the biggest groceries losers. Even Sainsbury's, after 36 quarters of growth, admitted that far fewer were going to its bigger stores and preferring to shop in convenience and online.

4. The extreme ends of the supermarket spectrum performed best. Waitrose and M&S recorded impressive growth in food. Waitrose drew customers away from Sainsbury's and Tesco with its essential ranges and price matching. At the other end, the discounters Aldi and Lidl had a storming Christmas with their decision to focus on quality as well as price.

5. All privately owned retailers did well – or so they would have you believe.

So far, the worst-performing retailers have all been outed because they have a duty to the stock market to reveal poor figures. Private companies such as New Look, and House of Fraser have all done well. However, they have the luxury of picking and choosing the dates that were the best performing, along with not needing to give a guidance on profits, leaving little way of knowing if heavy discounting hit the bottom line.

Alex Salmond said he accepted 'the democratic verdict of the people'
newsSNP leader says Scotland must move forward as 'one nation'
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
voicesApple continually kill off smaller app developers, and that's no good for anyone
Arts and Entertainment
Liam Neeson said he wouldn't

Liam Neeson's Downton dreams

Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
ebooksAn unforgettable anthology of contemporary reportage
A 'Sir Alex Feguson' tattoo

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear

Thriller is set in the secret world of British espionage

Life and Style

ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style

Bomber jacket worn by Mary Berry sells out within an hour

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week