Taste or Tat? Britain's Holiday Shopping Divide

(Bloomberg Opinion) -- High low dressing – mixing designer pieces with bargain finds – has become a fashion staple. The trend is also playing out across the British high street.

On Monday, luxury department store Selfridges, and value retailers Aldi U.K. and Dunelm Group Plc all posted strong Christmas performances.

Aldi said it generated sales of almost 1 billion pounds ($1.3 billion) for the month of December. The week beginning Dec. 17 was up 10 percent on the previous year, as cash strapped Brits snapped up its cut-price panettone and prosecco.

This year, you could get a lot of Christmas for a little. The direction of travel is clear: when Brits are spending, they want to get the best value for money. This bodes well for holiday sales reports from B&M European Value Retail SA, TheWorks.co.uk Plc, Aldi’s rival Lidl, and Associated British Foods Plc's Primark, which also gave customers plenty of pocket-friendly options.

Taste or Tat? Britain's Holiday Shopping Divide

But in other areas they are prepared to splash out, as the strong performance from Selfridges shows. That should also help the likes of Sports Direct International Plc's upmarket Flannels boutique, as well as rival JD Sports Fashion Plc's more premium lines. Luxury watches may have done well, too.

To be sure, Aldi's performance may have been flattered to some extent. First of all, it has focused on the week before Christmas, whereas most of the listed grocers will report a longer period. Given that November was so dismal, that may make its trading look better when compared with rivals.

Secondly, it has not disclosed same-store sales from supermarkets that have been open at least a year. This is important, because the discounter debuted 65 outlets in 2018. All that the company will say is that like-for-like sales were positive.

Even so, the fact that Aldi enjoyed such a big Christmas week shows that it is still doing well. Traditionally discount grocery shoppers switch to one of the big four supermarkets in the final days before the holiday, but that is no longer the case.

This underlines the challenges for the mid-market players.

The late surge in shopping that buoyed Next Plc and the John Lewis Partnership should have also benefited Marks and Spencer Group Plc's clothing and home furnishings arm, as well as Debenhams Plc. The latter also had a disastrous Christmas in 2017, so has very easy comparisons.

Taste or Tat? Britain's Holiday Shopping Divide

But even if the middle ground does escape the Christmas bloodbath that many – including myself – had been predicting, life isn't about to get any easier. True, struggling store groups should get a boost if Britain escapes an arctic blast over the next couple of months – they won’t have forgotten how trading in early 2018 was marred by plunging temperatures brought about by the Beast from the East.

Uncertainty over Britain's looming exit from the European Union, and high-profile planning for a no-deal scenario, will continue to weigh on consumer confidence.

That's likely to keep Brits scurrying for the value aisles – with the occasional detour for a bling buy.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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