Britain’s retailers have suffered one other blow after budget-conscious shoppers reined of their Christmas spending, disappointing hopes of a bumper festive season and leaving the “golden quarter” with solely muted development.
Figures from the British Retail Consortium (BRC)-KPMG Retail Gross sales Monitor present that whole gross sales rose by simply 0.4 per cent over the three months to December, in contrast with the identical interval in 2023. Households cautious of rising dwelling prices seem to have stored a decent grip on their wallets within the remaining weeks of 2024.
Helen Dickinson, chief govt of the BRC, famous that the “crucial ‘golden quarter’ failed to give 2024 the send-off retailers were hoping for” after what has already been a difficult yr of weak shopper confidence and financial pressure.
Total gross sales grew by 0.7 per cent in 2024, in contrast with 2023, however a 3.3 per cent uplift in meals gross sales was dented by a 1.4 per cent drop in non-food classes. Clothes, footwear, computing, furnishings, and toys had been amongst these areas hit by extra cautious spending.
Though December – mixed with the impression of Black Friday on the finish of November – yielded a 3.2 per cent year-on-year raise, the BRC steered these figures had been flattered by the late timing of final yr’s Black Friday offers. AI-enabled devices and wonder introduction calendars proved to be vacation bestsellers.
Dickinson mentioned meals gross sales “fared better” in December, inching up by 1.7 per cent year-on-year, though this was weaker than the 6.3 per cent development seen in December 2023. Some consumers opted to commerce as much as extra premium meals gadgets for Christmas, providing some respite for grocers.
Linda Ellett, head of shopper, retail and leisure for KPMG UK, described the run-up to Christmas as displaying “minimal” development, reflecting the “ongoing careful management of many household budgets”. Knowledge launched by the BRC additionally pointed to a “drab December” on excessive streets and in purchasing centres, with footfall probably affected by moist and windy climate.
Separate figures from Barclays revealed flat shopper card spending development in December, suggesting that the mix of value pressures and financial uncertainty has weighed on eating out and discretionary spending.
The retail sector’s lacklustre festive interval raises issues over how particular person companies fared. A flurry of post-Christmas updates from main gamers equivalent to Subsequent, Tesco, Sainsbury’s, and Marks & Spencer is predicted to supply extra perception, though many non-food retailers are braced for disappointing outcomes.
Low cost grocers Lidl and Aldi have each reported year-on-year will increase in whole festive gross sales, at 7 per cent and three.4 per cent, respectively, however they haven’t supplied like-for-like figures excluding new retailer openings.
The BRC has warned of a “spending squeeze” this January after public confidence within the financial system slid by eight factors to minus 27 final month. It forecasts gross sales development of only one.2 per cent this yr, falling beneath the 1.8 per cent store value inflation and implying a drop in gross sales volumes.
On high of that, retailers face a projected £7 billion improve in prices because of rising nationwide insurance coverage contributions, an uplift within the nationwide dwelling wage introduced in October’s funds, and new packaging levies. The commerce physique warns that overlaying these prices by elevating costs or slicing funding will hurt the sector additional and undermine excessive streets.
The BRC urged the federal government to “find ways to minimise this”, starting with a deliberate evaluation of enterprise charges to stop shops from dealing with larger payments than they do at the moment.
