Britain’s retailers were dealt another blow after budget-conscious consumers reined in their Christmas spending, disappointing hopes for a bumper festive season and leaving the ‘golden quarter’ with only weak growth.
Figures from the British Retail Consortium (BRC) and retail sales watchdog KPMG show that overall sales rose by just 0.4 per cent in the three months to December, compared to the same period in 2023. Households concerned about rising living costs appear to have kept their normal pace. A tight grip on their wallets in the final weeks of 2024.
Helen Dickinson, chief executive of the British Retail Consortium, noted that the crucial “‘Golden Quarter’ failed to deliver 2024 what retailers had hoped for” after what was already a challenging year of weak consumer confidence and economic pressures.
Overall sales grew by 0.7 percent in 2024, compared to 2023, but the 3.3 percent increase in food sales was affected by a 1.4 percent decrease in non-food categories. Clothing, shoes, computers, furniture and toys were among the areas affected by the more cautious spending.
Although December – combined with the impact of Black Friday at the end of November – had a 3.2 percent year-on-year rise, the BRC noted that those numbers were good due to the late timing of last year’s Black Friday deals. AI-powered gadgets and beauty advent calendars have proven to be holiday bestsellers.
Dickinson said food sales “were better” in December, rising 1.7 per cent year-on-year, although this was weaker than the 6.3 per cent growth seen in December 2023. Some shoppers chose Trading more premium food items for Christmas offers some relief to grocers.
Linda Ellett, head of consumer, retail and leisure at KPMG in the UK, described the run-up to Christmas as showing “minimal” growth, reflecting “continued cautious management of many household budgets”. Data from the BRC also pointed to a “gloomy December” in high streets and shopping centres, with footfall likely to be affected by wet and windy weather.
Separate figures from Barclays revealed flat growth in consumer card spending in December, suggesting that a combination of cost pressures and economic uncertainty has impacted dining out and discretionary spending.
The lackluster holiday period in the retail sector raises concerns about the performance of individual companies. A wave of post-Christmas updates from major players such as Next, Tesco, Sainsbury’s and Mars & Spencer is expected to provide further insight, although many non-food retailers are bracing for disappointing results.
Discount grocers Lidl and Aldi reported year-on-year increases in overall holiday sales, of 7 percent and 3.4 percent, respectively, but did not provide similar numbers except for new store openings.
The British Retail Consortium warned of “spending pressure” next January after public confidence in the economy fell by eight points to minus 27 last month. It expects sales to grow by just 1.2 per cent this year, below the store price inflation rate of 1.8 per cent, implying a decline in sales volumes.
Furthermore, retailers face an expected £7 billion increase in costs due to higher National Insurance contributions, the increase in the National Living Wage announced in the October Budget, and new packaging duties. The trade body warns that covering these costs by raising prices or cutting investment will further harm 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 shops facing higher bills than they currently face.
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