The latest BRC-KPMG Retail Sales Monitor confirms November was a tough month for the sector as low consumer confidence and rising energy bills dented non-food spending.
Total retail sales decreased by 3.3% year-on-year in November, in stark contrast to a 2.6% rise during the same period last year. However, the figures were impacted by the later Black Friday this year, which means trading data from the event will instead be included in December’s figures.
Food sales increased 2.4% over the three months to November, against a growth of 7.6% in 2023 and below the 12-month average of 3.7%.
Meanwhile, non-food sales slid 2.1% over the three months, against a decline of 1.6% in 2023. The BRC noted that spending on fashion was particularly weak as households delayed purchases of new winter clothing, while health spending was boosted by the season’s arrival of coughs and colds.
“Retailers will be hoping that seasonal spending is delayed, not diminished and that customers get spending in the remaining weeks running up to Christmas,” said Helen Dickinson, Chief Executive of the British Retail Consortium.
“If not, retailers will be feeling the squeeze from both sides as reduced revenues are met with huge additional costs next year.”
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, added: “While the majority of November’s data tells a disappointing tale for the retail sector, this reporting didn’t include Black Friday week, so the hope for retailers is that consumers were being savvy shoppers and that the promotional push in the last days of the month saw held-back consumer spend materialise and mitigate what is otherwise a disappointing month. If not, then we may see some retailers launching Christmas sales early.”
Looking at the performance of the food & drink sector, Sarah Bradbury, CEO at IGD, noted there had been year-on-year growth in both value and volume.
She pointed to new IGD research showing some signs of festive cheer, with 5% more shoppers than last year (41% vs 36% in 2023) planning to spend what they want this Christmas. “However, despite this uplift, it’s unlikely to be a bumper Christmas for all, as many remain focused on budgeting,” said Bradbury.
“The festive optimism is there, but the underlying caution means spending will still be influenced by economic pressures, especially on out-of-home activities.”
NAM Implications:
- Obviously vital that shelves are stocked for any/all demand.
- But the underlying issue is the real impact of low consumer confidence and rising energy bills…
- …with the Budget impact yet to emerge from the pipeline.
- True, on current trends, retailers may be left with a surplus.
- Hence the ’January Sales’ solution of yesteryear…
- Deep down there is a feeling of distrust and uncertainty…
- …and real confidence needs careful rebuilding for as long as it takes.
- Meanwhile, brands and retailers that get this point and act accordingly…
- …will most likely lead the recovery.
