The Christmas Grinch takes over any glimmer of retail cheer
In an ongoing escalation of the high-street crisis, ONS reports that retail sales volumes fell by 0.6% in December which represents a five-month ongoing decline. Looking at it from a three-month perspective, sales (quantity bought) are down 1% overall and amount spent down 0.9% for the October – December period when compared year on year; this is despite the spending sprees usually associated with Black Friday and the holiday period
Household goods and fuel were the only sectors that saw an increase when looking at a three-month year on year comparison, with 0.7% and 0.3% increases respectively.
Clothing experienced strong declines both in December at -2.0% and in the three months to December at -2.3%. Continuing the three-month view, this is the sixth consecutive month of no growth for clothing stores. Adding to the woe, quantity bought within department stores continued its downward trend with a monthly decline of 1.8% and a three-month year on year decline of 0.3%.
Online sales, which has remained relatively steady throughout 2019, accounted for 19% of December's retail spending, up from 18.6% the previous month. On this, British Retail Consortium (BRC) Head of Retail Insight Kyle Monk said: “Retail remains in the midst of a transformation driven by new technologies and changing consumer behaviour. Online purchases continue to rise, driven by Black Friday falling later in the year, giving an advantage to those retailers with a mature digital offering.”
More broadly, the BRC is on record as saying that 2019 was the worst year for retailers since 1995. It’s hard to disagree.
Ed Monk, associate director for Personal Investing at Fidelity International, has been quoted as saying,
“2019 was miserable for retailers, topped off by a dismal Christmas trading season. These figures will raise further questions around how robust the UK economy really is going into the year ahead. The Government has pledged action to help retailers and calls for action are likely to grow now.”
In comparison, Andrew Carlisle, Managing Director and UK Retail Consulting Lead at Accenture, struck a more optimistic note. "While these figures won't dispel concerns around the challenging UK retail climate, the picture is not all doom and gloom," he said. "Consumer confidence rose to its highest since July last month, showing there could be better times ahead in 2020. Retailers will be hoping that an economic bounce and regulatory relief will see an upturn in fortunes."
Despite the continues gloomy state of the sector, there is possible light ahead. These latest figures may be the catalyst for an interest rate cut when the Bank of England’s Monetary Policy Committee (MPC) meets later this month, and the Government is acting to support troubled retailers by cutting business rates for small firms and investing £3.6bn in town centres.
It’s a new year, with more clarity than ever about Brexit and a new Government in place which will hopefully remove what has been one of the biggest barriers to consumer confidence in recent times. Perhaps this, along with recognition that without change, there won’t be a high-street left to report upon, will be what consumers need to help bring more stability to the UK’s retail sector. Only time will tell.
Read the ONS Report for December
It’s been another tough month for retailers in the UK, highlighted by the November ONS report. Somewhat unhelpfully, the ONS reporting period means that Black Friday hasn’t been captured in the November report, though seasonal adjustments have been applied, so we can remain hopeful that the much needed boost to sales that this shopping frenzy attracts will have taken place.
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