Helen Dickinson OBE, Chief Executive of the British Retail Consortium (BRC), said after an exceptionally challenging year that saw inflation climb and consumer confidence plummet, the increase in spending over Christmas gave many retailers cause for cheer.
“Many consumers braved the cold snap and the strikes to ensure friends and families got the gifts they wanted, with energy-saving products, warm clothing and boots all selling well. Nonetheless, despite the stronger sales, growth remained below inflation, making December the ninth consecutive month of falling volumes,” she said.
“Retail faces further headwinds in 2023. Cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs. Retailers are juggling big cost increases while trying to keep prices as low as possible for their customers. And, from April, they will be hit with an additional £7.5 billion energy bill should the government’s Energy Support Scheme expire. We hope the Chancellor’s announcement this week will provide the necessary extension, or further price rises will be inevitable.”
Paul Martin, UK Head of Retail for KPMG, said while the numbers for sales growth in December look healthy, with sales values up by nearly 7 per cent last year, this is largely due to goods costing more and masks the fact that the volume of goods that people are buying is significantly lower this time last year.
“Consumers shunned big-ticket technology purchases in December, opting for energy-efficient household appliances and Christmas mainstays of clothes and beauty items. Food sales were also strong, growing nearly 8 per cent year-on-year as families gathered at home to make the most of an unrestricted Christmas,” he said.
“Despite the bad weather and with postal strikes ongoing, shoppers opted to head for the high street to browse for Christmas presents, with online sales growth continuing to slide across a number of categories.
“With Christmas behind us, retailers are facing a challenging few months as consumers manage rising interest rates and energy prices by reducing their non-essential spending, and industrial action across a number of sectors could also impact sales. The strong demand across certain categories that has protected some retailers will undoubtedly fall away, so we can expect high street casualties as we head into the Spring. This will present opportunities and some organisations will benefit from the current situation through market-share growth and consolidation opportunities that will arise. The first half of the year will be tough for retail and a case of survival of the fittest, but we expect to see demand increase as 2023 progresses.”
According to BRC’s analysis for 2022 overall, the UK’s total retail sales increased by 3.1 per cent from 2021. Food growth was 3.0 per cent and non-food growth was 3.2 per cent for the year. On a total basis, sales increased by 6.9 per cent in December, against an increase of 2.1 per cent in December 2021. This is above both the three-month average growth of 4.4 per cent and the 12-month average growth of 3.1 per cent.
It also found that UK retail sales increased by 6.5 per cent on a like-for-like basis from December 2021, when they had increased by 0.6 per cent. This was above the three-month average growth of 4.1 per cent and the 12-month average growth of 1.8 per cent.
Over the three months to December, food sales increased by 7.9 per cent on a total basis and 7.7 per cent on a like-for-like basis. This is above the 12-month total average growth of 3.0 per cent. For the month of December, food was in growth year-on-year.
Over the three months to December, non-food sales increased by 1.5 per cent on a total basis and 1.1 per cent on a like-for-like basis. This is below the 12-month total average growth of 3.2 per cent. For the month of December, non-food was in growth year-on-year.
Over the three months to December, in-store sales of non-food items increased by 5.3 per cent on a total basis and 4.5 per cent on a like-for-like basis since December 2021. This is below the 12-month growth of 25.6 per cent. Online non-food sales decreased by 3.0 per cent in December, against a decline of 13.9 per cent in December 2021. This is above the three-month average decline of 3.3 per cent and the 12-month decline of 11.2 per cent. The non-food online penetration rate decreased to 42.3 per cent in December from 44.3 per cent at the same point a year earlier.
