Waitrose and Morrisons will do well, and Tesco is set to improve on 2008, says Clive Black


After the turkey, turkey sandwiches and turkey curry, the yearly pilgrimage to Black Forest gateau and, keeping a Germanic theme, the joy of Golden Oktober, it will be time to gird one's loins for 2010 (unless one is in the Scottish Isles where first footing takes the amber haze into January). And so to abstinence, temperance and control.

The British food retailers will help our wishes not to consume alcohol, satfat, salt, sugar and anything else vaguely pleasurable to mortal beings after the festive excesses. We anticipate new year promotions to help shed ounces and maybe also getting the old tickers pumping faster so that come summertime, those swimming trunks can maybe, for once, come off without the help of a can opener. We also expect an 'orderly' market, maybe a bit of 'We're cutting prices by hundreds of millions' but little we've not seen before.

Accordingly, expect lots of 'low' this and 'reduced' that in the food aisles with the added touch of exercise equipment and jogging gear. Flogging these wares will keep the marketing men occupied until they can get their teeth stuck into the Chinese New Year and Valentine's Day. Exercise equipment also reflects the importance of non-food to the expansion plans of the big three superstore players and we expect them to be reporting particularly good non-food performances for the festive period, including pre-planned 'sales' as their capabilities, processes and investment in this area kick in. So which retailer will be the Christmas winner in the like-for-like sales growth league (and, of course, cash profit growth is the most important measure)?

Well, with a week to go until Santa arrives we sense the Christmas number one may be shared by Waitrose and Morrisons; headline figures bolstered by acquisitions. The bigger theme to us, though, is expected to be the converging performance overall, with the range between the big four narrowing materially year-on-year. This means Tesco should improve its relative performance over Christmas 2008.

Once the turkey is digested we'll put on our thinking caps to reveal our thoughts for 2010; the year of a general election in Britain, elections, too, in the US and, of course, the FIFA World Cup. Here comes our first prediction: sadly, England won't win. Merry Christmas and a Happy New Year from Shore Capital.

Dr Clive Black is head of research at Shore Capital Stockbrokers.

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