Worst Christmas for a decade for retailers says the British Retail Consortium
There was little Christmas cheer for the UK retailer sector last month, as new sales figures reveal it had the worst December performance since 2008.
According to the British Retail Consortium (BRC), on a like-for-like basis, UK retail sales fell by 0.7% from December 2017.
Year-on-year growth for the month was 0%.
The latest BRC-KPMG report said that retailers’ price cuts over the period – which have in recent years begun to happen increasingly earlier in the year in order to boost flagging sales – failed to encourage shoppers.
BRC chief executive Helen Dickinson said: “Squeezed consumers chose not to splash out this Christmas, with retail sales growth stalling for the first time in 28 months.
“The worst December sales performance in 10 years means a challenging start to 2019 for retailers, with business rates set to rise once again this year, and the threat of a no-deal Brexit looming ever larger.”
She added: “Retailers are facing up to this challenge but are having to wrestle with mounting costs from a succession of government policies – from the apprenticeship levy, to higher wage costs, to rising business rates.”
Paul Martin, UK head of retail at KPMG, said: “Retailers experienced little festive cheer this year, with total sales in December delivering zero growth on last year.
“Growth in food did provide a glimmer of hope, being among the few categories to notice an uptick.”
The non-existent year-on-year growth in UK retail over the last month was the culmination of a challenging year for the sector, in which shoppers stayed away from the high street on what is usually a peak trading weekend before Christmas.
Footfall for the last Saturday on already struggling UK high streets plummeted more than 9% compared with the same time last year, chiming with reports from the sector that consumers had become more cautious with their spending against a backdrop of uncertainty around Brexit and fears of a weakening economy.
Experts said freezing temperatures and the relentless popularity of shopping online were behind the low numbers, although there was a slowdown in online retail sales as well.
Prominent online retailers like ASOS that had done well over the period in previous years, fared no better than the high street this time around, while so-called Black Friday sales discounts failed to deliver a big enough boost to lift the beleaguered high street in November as like-for-like retail sales fell 0.5%, according to the BRC’s last report.
Last month ASOS issued a profit warning on the back of a “significant deterioration” in sales growth.
The company’s impromptu trading update was enough to fuel fears of a Christmas catastrophe for UK retailers, coming off the back of a turbulent year in which former high street stalwarts like the House of Fraser collapsed.
New owner and Sports Direct boss Mike Ashley, who bought the chain out of administration, said November had been “the worst in living memory” for the high street.
Meanwhile, a separate report from Barclaycard said consumer spending grew 1.8% year on year in December, the lowest rate of growth seen since March 2016.
Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, showed that essential spending growth dipped to just 0.6% – the lowest figure recorded since July 2016 – caused by a contraction in supermarket spending.
Esme Harwood, director at Barclaycard, said: “Growth in consumer spending dropped to its lowest level since 2016 and represents a decline in real terms.”
She said consumers “remain cautious amidst ongoing economic uncertainty”.