Upmarket retailers such as John Lewis struck gold in December, and so did the likes of Lidl, but Argos took a battering
If there has been one message from the high street over Christmas it is that we are not all in it together. While John Lewis were heaving with well-heeled middle Englanders, and trollies at Majestic Wine were piled high with champagne and Argentinian Malbec, there were no queues at the Argos collection counter.
Homeowners splurged after banking the savings made on mortgage payments during 2011 while lower-income families and those in rented accommodation continued to bear the brunt of the economic downturn.
According to investment bank Espirito Santo, 50% of shoppers have dipped into their savings to finance spending over the past six months – an option that doesn't exist for the fifth of households that have no savings at all.
The way the pain of the financial crisis is being shared about is reflected in the fortunes of the shops where different income groups spend their cash. Nowhere is the divide between the haves and have nots more apparent than at the supermarket checkout.
Marks & Spencer, Sainsbury's and Waitrose struck gold in December, selling salted caramel profiteroles, free-range turkeys and Heston Blumenthal's candied orange Christmas puddings.
At the other end of the scale, squeezed shoppers headed to Iceland and the hard discounters Aldi and Lidl. New data from Kantar Worldpanel showed Aldi's sales were up 18% in the 12 weeks to Christmas Day – more than five times the growth in the rest of the market. Lidl and Iceland were both up around 11%.
Terry Duddy, chief executive of Home Retail – the owner of Argos, where sales plunged by a frightening 9% – said success on the high street was now simple: "Follow the money … The John Lewis and Sainsbury's customer base has the money."
"Households at the higher end of the socioeconomic scale have more of a buffer, so it is easier to deal with a downturn. They have more savings and a lower percentage of their outgoings is spent on essentials like food and fuel bills," said Conlumino analyst Neil Saunders. "At the other end there is less you can cut back on."
Supermarket bosses have described how spending patterns develop through the month, with a big spike and higher sales of luxury items around payday, winding down to no-frills ranges and smaller baskets by the third week.
The place no business wants to be is in the squeezed middle – where the mighty Tesco took a battering unseen for decades, as aspirational consumers traded up and the hard-pressed shopped around for special offers.
Jonathan Pritchard of broker Oriel said there had been a move away from the middle market. "Aldi, Asda and Greggs attract a lot of custom from the C2DE demographic and have done very well this Christmas. Waitrose, M&S, and Sainsbury's have a more upmarket clientele and have also outperformed. It is the broader churches, seen as Tesco and Morrisons, that have struggled."
The hardship faced by groups on fixed incomes, such as pensioners, was evident in poor figures from N Brown, the home shopping group whose catalogues include JD Williams and Jacamo. Chief executive Alan White said its customers, whose average age is 57, were nervous about the prospect of hefty fuel bills in January. Gas and electricity prices are up roughly 25% and 15%, and he said a substantial minority of N Brown customers "were in the mode of buying nothing".
The tough economic conditions even knocked some of the sequins off the Christmas party bling, with many fashion stores selling fewer little black dresses ahead of the festive party season. "Rather than buy a cocktail dress to wear one night to the office do, women bought a sparkly top they could wear more than once," said White.
The Christmas retail winners and losers showed a polarisation in shopping behaviour, with Britons either buying into quality – including splurging on gadgets such as iPads and Kindles – or trading down. They also invested in brands with cachet, such as Superdry and Barbour, which were "good gifts to both give and receive". With no new technology, video games and iPod sales were weak, but there was demand for major DVD titles, such as the final instalment of Harry Potter.
"That was M&S's problem in fashion," said Saunders. "It is neither the cheapest nor the most aspirational … you can take it or leave it, and most people left it."
Retail sales are critically dependent on consumer confidence, with fear of unemployment a major factor behind dips in spending. Over the past two months Espirito Santo's monthly employment confidence poll has registered a 2% rise, to 16%, in the number expecting to be made redundant in the coming year.
This is the biggest issue for Britons, whatever their bank balance, said Saunders, with even well-off shoppers mixing luxury and value brands in their baskets to stick to self-imposed budgets.
At Sainsbury's, sales of its premium Taste the Difference range rose 10% but so did sales of ingredients from its low-price Basics range, as shoppers made economies elsewhere, even baking their own Christmas cakes, with sales of unsalted butter and dried fruit up 82% and 30%.
"Stores like Primark and Aldi have a growing number of AB shoppers because even though they do have more money, they are being more careful with it," said Saunders.