The latest BRC – KPMG Retail Sales Monitor reveals that’s in December UK retail sales increased by 0.6% on a like-for-like basis from December 2016.
The latest stats, which cover the five weeks from 26th November to 30th December 2017, show that on a total basis, sales rose 1.4% in December, against a growth of 1.7% in December 2016.
Looking specifically at non-food sales, over the three months to December 2017, in-store sales of non-food items declined 3.7% on a total basis and 4.4% on a Like-for-like basis – the deepest since BRC’s records began in December 2012.
However, online sales of non-food products grew 7.6% in December. This is below the 12-month average of 8.0%, but above the 3-month average of 6.2%. Online penetration rate increased from 23.0% in December 2016 to 24.1% in December 2017.
“There was both light and dark in this year’s Christmas trading period. Growth in spending was in line with the, albeit modest, average for the year. However, the divergence between growth in sales of food and non-food has never been so stark,” said Helen Dickinson OBE, chief executive, of BRC.
“With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts.
“That made this year’s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales. These promotions came as a welcome relief for stretched households, although the late lift in sales came at the expense of margins for many retailers.
“Retailers who did well in such a challenging environment got both their discounting strategy and omnichannel offerings right. Those who could offer and deliver on last minute delivery options did better, boosting online non-food sales more than 15 percent in the seven days before Christmas, a week when, until now, shoppers would have had to turn to stores to ensure gifts made it under the tree in time.
She concluded: “With spending likely to remain under severe pressure in the next few years, it’s imperative that in the forthcoming trade negotiations, the Government does all it can to avoid adding new tariffs to existing price pressures.”
Paul Martin, head of retail at KPMG, commented: “Christmas trading delivered meagre overall like-for-like growth of just 0.6 per cent in December. Online sales on the other hand rose 7.6 per cent, further reinforcing the disparity between the high street and online. Whilst a proportion of this divide can be attributed to Cyber Monday, shoppers are increasingly preferring to shop online, especially at Christmas.
“2017 presented retailers with a cocktail of geopolitical and economic uncertainty, on-going margin pressures and the structural changes driven by technology and changing consumer behaviour. In a market that will at best see stagnant growth in 2018, gaining market share will be a primary focus. That will entail understanding your customers fully – including where, when and how they want to shop.”