As winter approaches and debates intensify over the forthcoming Budget, a cloud of concern hangs over the British consumer landscape. The economic outlook appears daunting, leaving many to speculate about the potential challenges that lie ahead.

Despite this prevailing sense of unease, there’s a glimmer of hope for certain retailers poised to navigate these turbulent times successfully. Among them, a few prominent brands could emerge as winners if they deftly manage the holiday season. Let’s explore three such contenders that might defy the odds and thrive.

Tesco

Tesco stands out as a powerhouse in the retail sector, consistently demonstrating its uncanny ability to anticipate and fulfill consumer desires even before they fully materialize. Amidst the struggle with rising food prices and efforts to tighten budgets, Tesco has strategically responded to the shock of escalating restaurant costs.

The retailer has enhanced its Finest range to offer consumers the luxury of an indulgent meal at home, providing an appealing alternative to dining out. This winter, the revamped collection caters to the nation’s penchant for cozy nights in, featuring sophisticated options like tandoori spiced chicken supremes and hearty meals such as lamb rump with cannellini bean puree.

Ken Murphy, the chief executive, is optimistic about this new lineup’s potential. The Finest range has already seen a 16 percent increase in sales compared to the previous year, suggesting that Tesco’s strategy is resonating well with its customers.

Chief executive Ken Murphy hopes the new range will be as popular as the current one. Sales of Finest are up 16 per cent year on year.

In the driving seat: Tesco remains the seemingly unstoppable favourite of the retail world

And outside the world of Finest, Tesco is grabbing market share too. Figures last week from retail analysts at Worldpanel By Numerator showed the company now has 28.3 per cent of the market, with sales up nearly 7 per cent.

Tesco’s Whoosh delivery service is thriving, with sales up 59 per cent, and now covering 70 per cent of UK households.

The much-loved Clubcard is another strength, keeping customers loyal while delivering cheaper prices and giving the business the vital data about its shoppers that it is so good at using to increase sales and profitability.

Tesco shares are up nearly 20 per cent this year, and the company trades on 15 times forward earnings – a valuation that means you would pay 15p for every penny the company is expected to make this year.

Tesco, like all other retailers, has risks and pressures. Higher wage bills affect the company, while consumers are – despite the rise in purchases of lamb rump with cannellini beans – still price sensitive on the weekly shop.

Backing lower prices costs money – Tesco’s margin was down ten basis points in the recent interim figures, which the company says is ‘reflecting investments in the customer offer’ (that’s price cuts to you and me).

Great management, great data and the struggles of several of its rivals are all points that work in Tesco’s favour right now. Analysts were convinced by recent interim figures, with UBS lifting its price target on the shares to £5, up from £4.43 at present.

If you’re the type of investor happy to dig deep for Finest quality, buying Tesco still means you’ll get what you pay for.

Traded on: Main market Ticker: TSCO Contact: tescoplc.com/investors

Bargain hunting: There is optimism around certain retailers that could manage to buck the pessimistic trend

B&M Stores

Bombed-out B&M Stores is one of the cheapest ways you can get exposure to the retail sector, after a recent profit warning sent the shares slumping even further.

The firm, which has 786 stores across the UK, has lost its way as a budget retailer, but if recently appointed chief executive Tjeerd Jegen can make his turnaround plan work, investors could bag a bargain.

What went wrong at B&M? Fund manager and retail expert Alan Dobbie, who runs Rathbones Income Fund, says the company stopped focusing solely on pricing, meaning customers could no longer rely on a visit to B&M giving them the best-value version of a branded product they love.

Struggle: Bombed-out B&M Stores is one of the cheapest ways you can get exposure to the retail sector

Jegen is promising to go ‘back to B&M basics’ in a plan he hopes will bring ‘excitement and great value’ back to stores.

He’ll be reducing the number of items offered, focusing on cutting prices and giving managers more discretion so that the discounts offered match local needs.

It all sounds a bit, well, basic, but Dobbie, at Rathbones, reckons it is exactly what B&M needs. Jegen reckons it will work within 12-18 months – a relatively quick fix.

If you agree with him then B&M looks like the bargain antidote to AI-induced froth. The shares are down over 38 per cent this year and give those who buy into it a dividend yield of 6.5 per cent.

Even if a turnaround at B&M comes more slowly, its dividend yield is paying you to wait. Pop it in your basket for the long term.

Traded on: Main market Ticker: BME Contact: bandmretail.com/investors

Dunelm

DIY retailer Kingfisher delivered a surprise profit upgrade last month thanks to the resilience of the UK consumer.

Those who didn’t benefit from the 18 per cent jump in the B&Q owner’s share price may be wondering where else people are spending their money.

One answer may be Dunelm, the homeware retailer. Its shares are up just 8 per cent this year against Kingfisher’s 22 per cent, and offer a catch-up opportunity.

Looking ahead: Dunelm has an ambitious target of 10 per cent market share in the homeware market

The two companies have slightly different focuses – Dunelm has more furniture and Kingfisher more paints and power tools. But both provide consumers with ways to improve their home themselves.

Dunelm has an ambitious target of 10 per cent market share in the homeware market. It has many good qualities, including an ability to keep a grip on costs that has led to it sustaining its margins in an inflationary world.

While Dunelm customers refresh their homes, the company has had a big change as well. Clodagh Moriarty, former retail and technology officer at Sainsbury’s, took the helm as CEO earlier this month. Her technological nous should help drive Dunelm’s digital transformation further.

Dunelm shares are currently on £11.23 yielding nearly 4 per cent. They’re not a cheap option, but worth buying on weakness.

Traded on: Main market Ticker: DNLM Contact: corporate.dunelm.com/investors

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