M&S echoes UK peers on early Christmas demand, Ahold looks to loyalty

By James Davey

LONDON (Reuters) -British retailers are increasingly optimistic about the key Christmas trading period, with Marks & Spencer the latest to flag that shoppers are buying festive ranges early.

The upbeat tone in Britain comes despite a year of unrelenting economic gloom due to persistently high inflation, and contrasts with a more negative message from Ahold Delhaize which reported weaker general demand in its U.S. and European markets on Wednesday.

"We are definitely seeing good sales performance in our Christmas ranges," CEO Stuart Machin told reporters after M&S reported much better-than-expected first half results.

"In food people are buying into the ranges and actually eating those ranges now, we're very encouraged by the numbers in our party food section for example," he said.

British households have faced some of the toughest financial conditions in decades, with inflation slow to fall from the 41-year peak it hit in October 2022 of 11.1%, and stagnant economic growth weighing on consumers and corporations.

The British Retail Consortium, which has access to a large pool of retail sales data, said it believed many shoppers were still slow to start Christmas shopping as they wait for bargains on Nov. 24's Black Friday. But several large retailers have reported the opposite.

BIGGER FAMILY CHRISTMAS

M&S's Machin said research showed about 20% of its customers wanted to stock up on Christmas food products "slightly earlier" this year, with most of those customers planning for a bigger family Christmas.

Its bias towards older, more affluent customers gives it some protection from the rising cost of living, but discount fashion retailer Primark said on Tuesday that its customers had started Christmas shopping early this year too.

Food retailers Tesco and Sainsbury's, and clothing and home group Next have also all issued upbeat comments on the Christmas outlook, which contrasts with recent downbeat consumer surveys from Accenture, Deloitte and PwC.

But Ahold trimmed its earnings guidance and flagged margin weakness in the United States.

For the upcoming holiday season, it is leaning on private label products and hopes to entice customers with its offers to convert loyalty points into free seasonal products, such as pumpkin pie, as well as promotions on Thanksgiving turkeys.

One suggestion as to why retailers may be doing better in Britain is that some customers are trying to spread the cost of Christmas over more than one pay cheque. The big supermarkets have also benefited from people eating more at home rather than out, to help save money.

Still, the retail bosses are hopeful of strong demand for food, drinks and presents from now until the end of December. "I'm quietly confident on Christmas ... I think we're in very good shape," Machin said.

(Reporting by James Davey; Editing by Sarah Young, Kate Holton and Emelia Sithole-Matarise)