January earnings season is always kicked-off by the retailers with their Christmas trading updates. This gives us a first glimpse of how the UK consumer is behaving in the New Year and changing trends in retail. The popular opinion is that the High Street is dead and that Amazon is hoovering up all in its way. To pick just one example, the BBC told us last week that M&S ‘overestimated demand for tight-fitting men's clothing in the run-up to Christmas’ leading to yet another disappointing update from the Company.

We are altogether more optimistic on the outlook for UK retailers, if you look in the right place, and believe that even those with big High Street presences can be successful. JD Sports stands out as a shining example of a retail business that has continued to grow despite a tougher environment thanks to a combination of strong supplier relationships (hence Nike and Adidas give them the newest trainers before Sport’s Direct), being proactive in closing underperforming stores and plenty of internal promotion of staff. Online, Boohoo.com (now worth more than M&S) has been the perfect example of retail success, as reflected in shares more than doubling since January 2019. Their underlying brands, Nasty Gal and PrettyLittleThing, both had revenue rises of 40-50% over recent months. Greggs may not strictly be a retailer but they certainly have plenty of High Street shops and they have enjoyed a record breaking year on the back of successful innovation such as the vegan sausage roll. Greggs tell us that a vegan steak bake is in development. Watch this space…

It is particularly encouraging to see examples of smaller niche businesses that are thriving where large chains have dropped the ball. Shares in Games Workshop doubled over 2019 as the Company’s loyal fan base one again showed that they cannot get enough of Warhammer. The clear winners in retail now are those that have a differentiated offering and that have embraced the omni-channel world that we now live in. Retailers that have realised that a store should be a “Brand Cathedral” for customers to delight and revel in rather than be forced into buying things there and then will be the big winners as the High Street continues to evolve. Microsoft’s new flagship store on Oxford Circus is an excellent example of a store designed specifically to showcase their products and to build brand loyalty.

When thinking about who the retail winners or losers will be in the coming year, just ask yourself – would you rather visit an Apple Store or PC World, Selfridges or Debenhams, the Lego Store in Leicester Square or Toys R’ Us (when they still existed)?

The demise of the UK high street has been much heralded, and whilst it will likely continue to evolve in the coming years, there still exist some brands that are continuing to attract customers in their droves alongside thriving online brands. The UK retail sector is alive and well and some interesting investment opportunities continue to present themselves.

Fred Mahon is co-manager of the Church House UK Equity Growth Fund