After a disappointing 2024, retailers in the UK appear to have made a reasonable start to 2025.
Data from the BRC-KPMG Retail Sales Monitor shows spending was 2.6% higher than a year earlier, well above the average growth of 0.8% over the past 12 months. This was the strongest growth in almost two years, albeit on a weak comparable, with shoppers taking advantage of New Year discounts.
Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), revealed that stormy weather put a temporary dampener on demand, but sales growth held up well throughout the rest of the month. She also noted that the robust figures were helped by the earlier start of the reporting period, adding a few more post-Christmas shopping days into the mix.
Non-food sales increased by 2.5% in January, well above the 12-month average decline of 1.1%, with online sales up by 2.2%
Food sales rose by 2.8%, but this was below the 12-month average growth of 3%. Commenting on the sector’s performance, Sarah Bradbury, CEO of IGD, said: “A notable increase in volume over value sales suggests a shift towards private label products and a change in purchasing categories, as shoppers anticipate further price rises for food and drink.”
Meanwhile, Dickinson questioned whether the good performance of retailers will continue in the coming months. “Inflationary pressures are rising, compounded by £7bn of new costs facing retailers, including higher employer national insurance contributions, higher National Living Wage, and a new packaging levy,” she said.
“Many businesses will be left with little choice but to increase prices and cut investment in jobs and stores. Government can mitigate this by ensuring its proposed business rates reforms do not result in any shop paying more in business rates.”
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, added: “The trading environment remains tough for retailers, with consumer demand still subdued and household essential bills still high. Business costs are also coming under pressure, with rising employment costs only increasing that in the coming months. Boardroom focus on costs and competitiveness is sharpening. Pricing adjustments, product launches, store closures, job losses, and increased automation and AI are all set to reshape the retail landscape in 2025.”
NAM Implications:
- Brands under threat from the increasing advantage of own label.
- With Autumn Budget tax increases yet to impact fully.
- And US tariffs impact still uncertain in the UK.
- That said, any real growth will come at the expense of rivals.
- Therefore, retailers need to focus on relative competitive appeal…
