Christmas fulfils low expectations

UK retail sales values were up 0.3% on a like-for-like basis from December 2011, when they were up 2.2% on the preceding year. On a total basis, sales were up 1.5%, against a 4.1% rise in December 2011. The discrepancy between the rate of growth for food and non-food has been narrowing in recent months to the detriment of food. Online sales were up 17.8%, the fastest growth since December 2011, when they had risen by 18.5%.

Helen Dickinson, Director General, British Retail Consortium, said: “Against the relentlessly tough economic backdrop and low expectations, these results are not a cause for celebration, but not a disaster either. Total growth for December hasn’t beaten inflation and is only on a par with December 2010, when severe weather put sales volumes on ice for much of the month. Online was the stand-out performer, showing its highest rate of growth this year. Shoppers are increasingly taking advantage of the convenience that online shopping offers at every stage of the customer journey, from comparing prices to reserving and collecting in-store.

“Retailers knew they were facing a challenging Christmas. Some did better than others but they were generally well prepared for shoppers’ limited spending power. After a sluggish start, the final few days leading up to Christmas saw a last-minute sales boost, as many made the most of a full shopping weekend which the calendar didn’t offer in the previous year. Footfall was disappointingly low but it seems that when people did make shopping trips they bought a lot in one go.

“This rather underwhelming result brings a year of minimal sales growth to a close. Retailers will be hoping that a continuing boost from post-Christmas sales events strengthens January’s figures but, unfortunately, there are few signs that their sense of ‘running fast to stand still’ is likely to ease off any time soon.”

David McCorquodale, Head of Retail, KPMG, said: “A flat end to a flat year is perhaps the best way to describe the Christmas trading for 2012. Despite mild, albeit wet, weather for the whole of the last quarter and an extra full weekend immediately prior to Christmas, the final quarter saw total sales rise only 1.5 per cent on the previous year and like-for-likes rise by only 0.2 per cent - both rises lower than inflation.

“Retailers this year were perhaps better prepared for a sluggish quarter and held less stock throughout. The stand-off between retailers and consumers looking for bargains and discounts continued throughout December and, while some retailers will report record Christmas sales, most will breathe a sigh of relief because it could have been much worse. Footfall rose in the last week of the year as consumers sought out some bargains but the year’s trading is made in the six weeks leading up to Christmas, not the six days after it.

“January will be a tough month for retailers as consumers face up to their credit card bills after Christmas and it’s likely 2013 will bring more of the same challenges. While consumer confidence remains low, shoppers will tighten their belts and rein in their spending, making life difficult for the average UK retailer. There will be no boom and it’s likely more than a few will go bust.”

Food & Drink sector performance – Joanne Denney-Finch, Chief Executive, IGD, said: “The focus on eating and drinking over the festive period helped retain the week leading up to Christmas as the biggest of the year, in terms of food and grocery sales.

“But taken as a whole, December’s performance was relatively flat. Yet again shoppers left it even later than the previous year to do their Christmas grocery shopping, with a strong final two weeks off-setting a slow start to the month.

“The challenging conditions look set to continue into this year. Our ShopperVista research shows over half of shoppers (51 per cent) are aiming to save money on their grocery shopping over the next six months. This figure rises to 67 per cent of families with teenagers.”

Online (Non-Food) – Helen Dickinson, Director General, British Retail Consortium, said: “This is by far the strongest online sales showing this year and marks a real return to form after momentum dipped in the previous few months. Online retail still accounts for a relatively small part of total sales, but in December it played a disproportionately larger role in driving non-food sales. Many valued the ease and convenience of shopping online during the Christmas period. The surging popularity of tablets and smartphones giving even better access is a major factor. Shoppers took advantage of the investment many retailers have made in making their websites easier to use across multiple devices, in flexibility of delivery options as click-and-collect came of age and in security – they now feel much more comfortable putting their credit card numbers into their mobile phones.”