Steve Hawkes
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Clothing retailers might be wise to stock up on extra large items for when shoppers do return to the high street after Domino’s Pizza yesterday became the latest retailer to suggest that consumers are munching their way through the credit crunch.
Days after The Times revealed that McDonald’s had enjoyed one of its best years in Britain for two decades, Domino’s reported a 17.6 per cent increase in like-for-like sales for the six weeks to December 30.
The sheer number of people ordering a calorie-laden Meatzza Pizza means that the group now expects its 2007 profits to beat expectations.
In a separate update Zavvi, the company that bought Virgin Mega-stores last September, said that sales of computer games had soared by 63 per cent over Christmas and new year. This comes at a time when furniture retailers and electrical stores battle one of the bleakest slowdowns for three years.
Colin Waine, chairman of the National Obesity Forum, said: “It seems we are developing some unhealthy habits. The younger age group keep saying they are concerned about obesity. Unfortunately, they just don’t seem concerned enough to alter their behaviour.”
Chris Moore, the Domino’s chief executive, insisted that the group was benefiting from refreshing the menu and hitting its 30-minute delivery deadline. He added that the consumer slowdown was likely to benefit Domino’s in the coming months as consumers concerned about their finances “trade down” from restaurants. Domino’s is planning an £18 million advertising campaign this year - its biggest.
Mr Moore said: “It’s far too early to tell yet if some switching is going on, but typically our price points help us in tougher times. If you go out three-to-four times a week, you may trade down once a week and just decide to order in instead.”
The British Retail Consortium yesterday showed that retail sales rose by only 0.3 per cent in December on a like-for-like basis, the weakest December since 2004. Consumer spending may grow by only 1 per cent this year as shoppers face a heavy financial burden from rising mortgage bills, petrol prices and energy costs.
Amanda Ursell, nutrionist for The Times, said that comfort eaters typically opted for burgers and pizzas, given their high fat and salt content. She said: “They meet almost every single instant requirement of comfort food given the quick sugar hit. But a baked apple or grilled banana would be much better for someone.”
Dunelm, the home furnishing group, and Topps Tiles both added to the gloom surrounding the outlook for the wider high street yesterday by reiterating the caution voiced by other retailers in the past week.
Will Adderley, Dunelm’s chief executive, said: “We’re not big-ticket but we’re still very cautious. We’re concerned about the housing market and concerned about inflation.”
Dunelm plans to take advantage of cheaper rents by opening nine more stores this year, creating 700 jobs. Like-for-like sales rose 4.9 per cent in the 26 weeks to the end of December.
Crackers and turkeys
Sales performance over Christmas*
Domino’s Pizza 17.6%
Zavvi 10.2%
Yo Sushi 5%
Dunelm 4.9%
Topps Tiles 0.8%
Jessops 0.3%
*All like-for-like basis
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