Britain’s retailers have suffered another blow after price-conscious consumers reined in their Christmas spending, disappointing hopes for a bumper festive season and leaving the ‘golden quarter’ with only moderate growth.
Figures from the British Retail Consortium (BRC)-KPMG Retail Sales Monitor show that total sales increased by just 0.4 percent in the three months to December, compared with the same period in 2023. Households on their guard the rising costs of living and the last weeks of 2024 seem to be a firm grip on their wallets.
Helen Dickinson, chief executive of the BRC, noted that the “crucial ‘golden quarter’ of 2024 has not provided the send-off retailers had hoped for” after what has already been a challenging year of weak consumer confidence and economic tensions.
Total sales grew 0.7 percent in 2024 compared to 2023, but a 3.3 percent increase in food sales was offset by a 1.4 percent decline in non-food categories. Clothing, footwear, computers, furniture and toys were among the areas hit by more cautious spending.
Although December – combined with the impact of Black Friday at the end of November – delivered a 3.2 percent year-on-year increase, the BRC suggested these figures were flattered by the late timing of last year’s Black Friday deals. AI-based gadgets and beauty advent calendars proved to be bestsellers for the holidays.
Dickinson said food sales “performed better” in December, up 1.7 percent year-on-year, although this was weaker than the 6.3 percent growth in December 2023. Some consumers opted to switch to more expensive foods for Christmas, which provides peace of mind for the grocers.
Linda Ellett, head of consumer, retail and leisure at KPMG UK, described the run-up to Christmas as “minimal” growth, reflecting the “continued careful management of many household budgets”. Data released by the BRC also indicated a “dull December” on the high street and in shopping centres, with footfall likely to be affected by wet and windy weather.
Separate figures from Barclays showed flat growth in consumer card spending in December, suggesting that the combination of cost pressures and economic uncertainty has weighed on dining out and discretionary spending.
The lackluster holiday season in the retail sector is raising concerns about how individual businesses have fared. A flurry of post-Christmas updates from major players such as Next, Tesco, Sainsbury’s and Marks & Spencer are expected to provide further insight, although many non-food retailers are bracing for disappointing results.
Discount retailers Lidl and Aldi have both reported year-on-year increases in total festive sales, up 7 percent and 3.4 percent respectively, but they have not provided comparable figures excluding new store openings.
The BRC warned of a “spending squeeze” in January after public confidence in the economy fell eight points to minus 27 last month. It forecast sales growth of just 1.2 percent this year, below retail price inflation of 1.2 percent. 8 percent and implies a decline in sales volumes.
In addition, retailers face an expected cost increase of £7 billion due to rising national insurance contributions, an increase in the National Living Wage announced in the October Budget, and new packaging charges. The trade body warns that covering these costs by raising prices or cutting investment will further damage the sector and undermine the high street.
The BRC urged the government to “find ways to minimize this”, starting with a planned review of business rates to prevent stores from facing higher bills than they currently do.