Retailers hit by subdued festive demand - BRC

Retailers finished 2023 on the back foot, industry data showed on Tuesday, despite a modest uptick in demand in the week leading up to Christmas.

According to the latest BRC-KPMG Retail Sales Monitor, UK total sales increased by just 1.7% in the five weeks to 30 December, compared to a 6.9% rise a year previously.

The increase was below the three-month average of 2.3%, and the 12-month average of 3.6%.

December is the most important month of the year for many retailers, as consumers splash out on homewares, presents and festive food.

Helen Dickinson, chief executive of the British Retail Consortium, said there had been a "slight" uptick in the week leading up to Christmas.

But she added: "The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continue to hold back spending.

"The post-Christmas sales were unsuccessful in enticing spend in areas such as furniture and homewares, with households remaining cautious about making larger purchases.

"2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs."

Overall total retail sales increased 3.6% year-on-year in 2023. Food sales jumped 8.1%, while non-food sales ticked 0.1% lower. Sales figures are not adjusted for inflation.

In the three months to December, food sales rose by 6.8% while non-food sales eased 1.5%.

Paul Martin, UK head of retail at KPMG, said: "The festive feelgood factor was lacking this year, as many retailers faced a disappointing December.

"Christmas shoppers ditched clothing, jewellery and technology gifts, opting for beauty and health and personal care products, which - along with food and drink - drove festive sales this year.

"Despite falls in inflation, an upcoming cut in National Insurance rates and some consumers having more money in their pockets this Christmas than last, the constant drip of economic challenges over the last two years has come home to roost."

However, Sarah Bradbury, chief executive of the Institute of Grocery Distribution, noted: "We leave 2023 on an encouraging note for food and grocery, as December saw sales increase on 2022.

"While these were down by a month-on-month comparison, continuing the trend seen in October and November, this is likely caused by falling food and drink inflation.

"Volume increase slightly versus December 2022, with Christmas week seeing the largest weekly year-on-year volume increase since April, likely helped by retailers cutting the prices of essential Christmas dinner vegetables."