Retailers struggled over Christmas as shoppers cut back on spending

The hopes that retailers would have the first good Christmas in three years were dashed on Friday as new figures showed the sector sold far less than expected as shoppers tightened their belts.

One small business owner said that she only had “a couple of sales” from regular customers in the vital month of December as shoppers struggled with the cost-of-living crisis.

Retail sales volumes were estimated to have dropped by 1% in December, the second month of decline, the Office for National Statistics (ONS) said. It was far worse than the 0.5% rise that experts had been expecting, according to a consensus from Pantheon Macroeconomics.

The proportion of online sales fell to 25.4% in December, from 25.9% the month before.

Spending in non-food shops dropped by 2.1% during the month. It is the latest sign of the pressure the cost-of-living crisis is putting on households up and down the country.

Heather Bovill, ONS Deputy Director for Surveys and Economic Indicators, said: “Retail sales dropped again in December with feedback suggesting consumers cut back on their Christmas shopping due to affordability concerns.

“Online sales dipped with feedback indicating postal strikes were leading people towards purchasing more goods instore.”

The data showed that shopping volumes fell by 3% in 2022 as a whole, compared to a 5.2% increase in 2021, when the economy was bouncing back from COVID-19.

Helen Dickinson, Chief Executive of the British Retail Consortium, commented: “Many of the cost pressures bearing down on retailers and their customers remain in 2023, with high energy costs, the war in Ukraine, and domestic labour shortages all taking their toll. However, BRC modelling suggests the situation will improve in the second half of the year.”