United Kingdom (Commonwealth Union)_ UK retail sales were sluggish in November since Black Friday discounts failed to lure droves of shoppers struggling with the burden of the higher cost of living.
Total sales increased 2.7% in November, compared with 4.2 % growth a year earlier, the British Retail Consortium and consultancy KPMG said in a report Tuesday. Sales of non-food items declined, with shoppers particularly avoiding expensive categories including watches and jewellery.
Christmas is off to a weak start for retailers who are relying on the crucial period to boost their sales. Festive spending is forecast to drop 13 % to £20 billion ($25 billion) this year, according to a separate survey by PwC that was also released Tuesday.
UK head of retail at KPMG – Paul Martin, said that the cost-of-living crisis has taken its toll on Christmas spending for many households, and the continued economic conditions were testing consumer resilience. He said they were likely to see a prolonged and well-targeted period of discounting as retailers compete hard for a shrinking pool of spend and will need to clear stock.
Black Friday started earlier than usual this year and originally gave a much-needed sales boost to retailers, but the momentum failed to last through the month, said Helen Dickinson, chief executive officer of the BRC.
She said retailers were banking on a last-minute flurry of festive frivolity in December.
PwC said there was a chance shopping may heat up as the number of people saying they will spend less this Christmas season has dropped to 18% from 30% in September. The consultancy said most people would do the bulk of their present-buying during the first two weeks of December.
Grocery shopping is a different story. Data cruncher Kantar forecast that Christmas grocery sales may reach a record this December, exceeding £13 billion partly because prices of food and drink are still rising, though at a slower pace. Grocery price inflation was 9.1% in the four weeks to 26th November versus 9.7% the previous month.
Grocers are competing especially on the price of ingredients for Christmas meals, which has risen 1.3 percent to £31.71, significantly less than the main inflation rate, according to Kantar. Consumers will purchase on average 10% more items than in a typical month as they host family and friends.
Retailers may struggle with excess inventory aside from food, leading to big January sales. KPMG warned that there could be further casualties in the retail sector, particularly among pure online businesses which have faced more than 28 consecutive months of sliding sales.
There has been a long line of British retailers that have struggled with the cost-of-living crisis following pandemic shutdowns. The past year has seen insolvency filings from fashion and homeware business Cath Kidston, low-cost retailer Wilko, online furniture brand Made and fashion chains Joules and M&Co.
Retailers will also have to face growing cost pressures next year due to a rise in business rates and an increase in the minimum wage.
