British retailers faced yet another problem after budget-conscious shoppers stepped up their Christmas spending, dashing hopes for a bumper holiday season and leaving the “golden quarter” with only muted growth.
Figures from the British Retail Consortium (BRC)-KPMG Retail Sales Monitor show that total sales rose by 0.4 per cent in the three months to December, compared to the same period in 2023. hold tight to their wallets in the final weeks of 2024.
Helen Dickinson, chief executive of the BRC, noted that “a key ‘gold’ sector failed to deliver in 2024 that retailers expected” after what has already been a challenging year of weak consumer confidence and economic difficulties.
Total sales grew by 0.7 percent in 2024, compared to 2023, but the 3.3 percent increase in food sales was offset by a 1.4 percent decrease in non-food categories. Clothing, shoes, computers, furniture, and toys were among those areas affected by cautious spending.
Although December – combined with the impact of Black Friday at the end of November – was up 3.2 per cent year-on-year, the BRC suggested those figures were influenced by the timing of last year’s Black Friday deals. AI-powered gadgets and beauty advent calendars proved to be top sellers during the holidays.
Dickinson said food sales “improved” in December, rising 1.7 percent year-on-year, although this paled in comparison to the 6.3 percent growth seen in December 2023. Christmas, however, gives shoppers a break.
Linda Ellett, head of consumer, retail and leisure at KPMG UK, described the Christmas preparations as showing “modest” growth, reflecting “continued careful management of many household budgets”. The data released by the BRC also pointed to a “heavy December” for high streets and shopping areas, with footfall likely to be affected by the wet and windy weather.
Separate figures from Barclays revealed growth in consumer card spending in December, suggesting that a combination of cost pressures and economic uncertainty weighed on consumption and discretionary spending.
A weak holiday season for the retail sector raises concerns about how individual businesses have fared. A series of post-Christmas updates from major players such as Next, Tesco, Sainsbury’s, and Marks & Spencer are expected to provide more insight, although many non-food retailers are expected to see disappointing results.
Discount grocers Lidl and Aldi both reported year-over-year increases in total holiday sales, of 7 percent and 3.4 percent, respectively, but did not provide comparable figures without new store openings.
The BRC has warned of “spending” this January after public confidence in the economy fell eight points to 27 last month. It predicts sales growth of just 1.2 percent this year, which falls below the retail price index of 1.8 percent and implies a decline in sales.
On top of that, retailers face an estimated £7 billion rise in costs due to rising national insurance contributions, the rise in the national living wage announced in October’s budget, and new packaging taxes. The trade body warns that paying for these costs by raising prices or cutting investment will hurt the sector and destroy highways.
The BRC called on the government to “find ways to reduce this”, starting with a systematic review of business rates to prevent shops from facing higher debts.
