Next and B&M will get retail reporting kicked off for 2023 when they release trading statements to the market on Thursday.
It is a busy month for the sector, with 16 companies including Sainsbury, ASOS and Primark-owner Associated British Foods all issuing updates.
January can often be an interesting time, the quietest trading month of the year immediately following the busiest period.
Here are some trends and themes to possibly expect in this month’s market updates.
Christmas spending
As mentioned above, January reporting follows the busy festive period, so expect figures on sales for the month of December.
For the grocers, Kantar’s data released today gave some indication on Christmas business.
Take-home grocery sales hit £12.8bn in the four weeks to 25 December, the first time the £12bn mark has been breached in any 28-day period.
However, how much of this growth in sales is attributed to inflation, currently at 14.4% according to Kantar, will be something to keep an eye out for when Sainsbury's, Tesco and Marks & Spencer update the market this month.
For the high street, data from Springboard found that footfall in the week after Christmas was up 9.3% compared to last year, but still way off the pace on the same week in pre-pandemic 2019, down 23.1%.
This could mean retailers may have struggled to get rid of some of that unwanted stock, which could result in further discounting down the line.
Cost inflation
Cost inflation has been a major concern for all in the sector, forcing retailers to hike prices to protect margins, or keep prices flat but retain customers.
Primark, for example, promised to freeze prices in November to “stand by” its customers, while Sainsbury's issued a similar "investment in value" to try and keep prices low.
However, some retailers have continued to raise prices even above inflation.
A study by Skuuudle, a price tracking tool, found that the cost of over 19,000 household staples, such as oils and pasta, increased by almost 16% between July and December, ahead of grocery inflation, currently at 14.4%.
With the outlook still very uncertain and the market still very volatile, expect retailers to remain cautious about cost inflation.
Omnichannel offerings
Following the Covid pandemic, there has been a change in shopping habits which has resulted in consumers wanting a retailer to provide an excellent online and physical presence.
The demand from customers even saw Primark, renowned for being a solely brick-and-mortar company, dip its toe into the online world with a click-and-collect service.
Analysts believe retailers that offer both services well are better equipped to manage what looks set to be a tough 2023.
Stifel, the investment bank, noted that Next is likely to thrive in these difficult times partly due to its multi-channel offering.
Matt Britzman, an equity analyst at Hargreaves Lansdown, also added that Currys’ omnichannel offering is one of its positives.
Customers can enter in-store and have access to the entire online collection or speak to an in-store expert from their own homes.
Retailers reporting in January
05/01- Next, B&M
06/01- Greggs
10/01- Games Workshop
11/01- Sainsbury
12/01- ASOS, Marks and Spencer, Tesco
19/01- Burberry, Currys, WHSmith
20/01- Dunelm
21/01- TheWorks.co.uk
24/01- Associated British Foods
26/01- Dr Martens
31/01- Pets at Home