The commencement of the festive shopping season sees a notable decline in retail sales, as cautious consumers impact the market.
- November saw a 3.3% decline in the British Retail Consortium’s reported total sales, diverging from the previous year’s growth of 2.6%.
- Food sales recorded a modest increase of 2.4%, but non-food sales experienced a significant decline with online sales dropping by 10.3%.
- Market analysts attribute the sales slump to shifting seasonal spending patterns and economic pressures such as rising energy costs.
- Retailers remain optimistic that delayed purchasing will result in a surge in spending in the weeks leading to Christmas.
In November, retail sales in the United Kingdom faced a challenging start to the key festive period, recording a 3.3% drop according to the British Retail Consortium (BRC). This contrasts with a 2.6% growth in the same month the previous year, and surpasses the average annual growth rate of 0.5%. The data suggests consumers are being more cautious due to economic uncertainties.
The BRC noted that food sales increased marginally by 2.4% over a three-month period ending in November. This rise, however, pales in comparison to the 7.6% growth observed during the same timeframe in 2023 and the 12-month average growth of 3.7%. It highlights a shift in spending priorities among consumers, who are perhaps prioritising essential goods amidst rising living costs.
Non-food sales have seen a marked decline, with the three months leading to November showing a 2.1% decrease. Particularly impacted are online non-food sales, which plummeted by 10.3%. This significant downturn is partly attributed to the timing of Black Friday sales, which were captured in December rather than November this year.
Helen Dickinson, Chief Executive of the BRC, stated that the re-timing of Black Friday sales might have skewed November’s figures. Nevertheless, she acknowledged that low consumer confidence along with rising energy bills exert pressure on spending, notably in non-essential categories such as fashion. The reluctance to purchase new winter clothing was evident, while health-related spending saw an uptick due to seasonal illnesses.
Linda Ellett from KPMG UK highlighted that the exclusion of Black Friday from November’s data provides hope that consumer spending will rebound in December. She suggested that strategic promotions could stimulate the release of pent-up consumer demand, thus potentially alleviating the overall sluggish performance observed thus far.
Retailers are hopeful that the anticipation for holiday spending will reignite consumer activity in December.
