2018 was worst Christmas for retail in a decade, says index

Marco Green
January 11, 2019

Shops saw no growth in sales in December compared with a year earlier, the worst performance in a decade, and fell 0.7 percent on a like-for-like basis, according to industry figures. Online sales of non-food products grew 5.8 per cent in December, against a growth of 7.6 per cent in December 2017 - above the three-month average of 5.5 per cent, but below the 12-month average of 6.9 per cent.

The lethargic sales come despite encouraging festive trading updates from several prominent high street chains. Sports Direct boss Mike Ashley branded the pre-Christmas sales period the "worst ... in living memory" for retailers.

She said consumers "remain cautious amidst ongoing economic uncertainty". In a "volatile" environment with customers seeking discounts, Debenhams reported a 5.7% fall in like-for-like sales in the 18 weeks to 5 January. But overall sales during the crucial month of December spell trouble for retailers as they head into the new year.

"Despite this, we had a positive Christmas trading period, thanks to the extraordinary efforts of partners in our business". The company, which is the UK's biggest supermarket chain, says its like-for-like sales over Christmas in the core United Kingdom area were up 2.2% in the six weeks to 5 January.

The BRC said that on a like-for-like basis, United Kingdom retail sales decreased by 0.7% from December 2017.

"The desire to indulge over Christmas prevailed once more and seven in 10 shoppers said they spent extra on higher quality food last month", he said.

He added that the firm's full-year profits would be "substantially" lower this year.

PA Wire  PA Images Shoppers failed to splash out over Christmas new figures reveal highlighting the problems facing Britain's retailers
PA Wire PA Images Shoppers failed to splash out over Christmas new figures reveal highlighting the problems facing Britain's retailers

Last month ASOS issued a profit warning on the back of a "significant deterioration" in sales growth. "The worst December sales performance in ten years means a challenging start to 2019 for retailers, with business rates set to rise once again this year, and the threat of a no-deal Brexit looming ever larger".

Footfall for the last Saturday on already struggling United Kingdom high streets plummeted more than 9% compared with the same time a year ago, chiming with reports from the sector that consumers had become more cautious with their spending against a backdrop of uncertainty around Brexit and fears of a weakening economy.

BRC chief executive Helen Dickinson said: "Squeezed consumers chose not to splash out this Christmas, with retail sales growth stalling for the first time in 28 months".

The sluggish figures will make for grim reading for the retail sector, which is struggling to cope with a decline in footfall due to digital competition, as well as a rise in business rates and growing wages.

Paul Martin, the United Kingdom head of retail at the survey compilers KPMG, said retailers had slashed prices to attract shoppers but had seen only modest returns for their efforts.

Despite more than half of people voicing support for their high street, and almost four in 10 saying they deliberately choose the high street over online retailers, almost 50 per cent expect to curb their spending this month to cover the cost of Christmas.

The non-existent year-on-year growth in United Kingdom retail over the last month was the culmination of a challenging year for the sector, in which shoppers stayed away from the high street on what is usually a peak trading weekend before Christmas.

Other reports by Click Lancashire

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