BRC reports worst December retail sales

13 Jan '09

5 min read

UK retail sales values fell 3.3% on a like-for-like basis, and 1.4% on a total basis, from December 2007. By both measures, this was the worst December since the survey began 14 years ago and, barring Easter distortions, the worst performance of any month in that time.

Food and footwear were the only sectors to show sales up on a year ago – the latter reflecting further heavy discounting. Clothing, furniture and big-ticket homewares fell further below year-earlier levels.

The first half of December was very tough for many. Christmas buying came later than usual: there were more shopping days in Christmas week this year and shoppers tended to wait for discounts and early clearance sales.

Non-food non-store sales in December were 30.0% higher than a year ago. This was stronger than the 16.6% gain in November, as people were more confident about Christmas shopping online and several stores had later last order dates than last Christmas.

Stephen Robertson, Director General, British Retail Consortium, said: “These are truly dreadful numbers. Some retailers were more successful than others and the second half of December was better than the first. But overall the food sector was almost the only one to show growth. And even this was at the slowest rate since last March.

Footwear was the only other sector where sales were up on a year ago. Otherwise, non-food retailers had a torrid December despite a blizzard of promotions and deals, which would have hit margins. Many hard-pressed customers couldn't be seduced into spending."

“This is no time for the Government to be piling new burdens on a major job-supporting sector such as retailing. For example, its plans to push retailers' business rates bills up by £1.6 billion over the next two years urgently needs revising."

Helen Dickinson, Head of Retail, KPMG, said: "December's performance has historically set the scene for the year ahead, so the outlook is indeed bleak. In a business environment where cash is even more important than ever, due to the impact of the 'credit crunch', retailers did all they could in December to keep the money coming in, raising discounts across the month to unprecedented levels.

That this was the worst December sales performance since the survey began 14 years ago is testament to the severity of the shift in mentality of the consumer. Although the food sector continues to hold up, most non-food retailers are having to manage the 'double whammy' of falling sales and falling margins and this doesn't look like changing any time soon."

Growth in non-food non-store sales picked up in December to show a year-on-year gain of 30.0% from 9.5% in November and 16.6% in October. Thus they continued to outpace store sales, but the expansion is from a very low base, as non-food non-store sales account for only about 4% of total retail sales.

Shoppers used the internet much more this Christmas as they have become more confident about ordering online, appreciating the convenience of shopping from home and trusting payment security.

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