Weak sales growth ends ‘sluggish’ year for UK retailers

Retailers suffered a disappointing festive period that failed to make up for a challenging year of sluggish sales growth, figures show.

Weak consumer confidence continued to hold back spending, with total UK retail sales up by just 1.7% in December against growth of 6.9% a year earlier, according to the BRC-KPMG Retail Sales Monitor.

Sales saw a slight increase in the week leading up to Christmas as consumers scrambled to purchase last-minute gifts – particularly online – due to the wet weather.

Christmas shoppers shunned clothing, jewellery and technology gifts, opting instead for beauty, health and personal care products, while toys and gaming also sold well, the BRC said.

Retail sales over the year overall were up by 3.6% on 2022.

Food sales increased 6.8% over the three months to December, below the 12-month average of 8.1%, while non-food fell by 1.5%.

Helen Dickinson, CEO of BRC, said: "The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continued to hold back spending.

"2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs. Retailers will also have to juggle various cost pressures, including the rise to business rates this April.

"This will be compounded by other emerging issues, such as the disruption to shipments from the Far East via the Red Sea. Political parties must consider this backdrop when they set out their plans for retail in manifestos so they can help support the industry to grow, invest, and serve customers."

Paul Martin, UK Head of Retail at KPMG, said: "The festive feelgood factor was lacking this year as many retailers faced a disappointing December with sales growth only up 1.7% on 2022.

"Retailers rolled out promotions that lasted longer and were deeper than last year and higher promotional activity amongst supermarkets saw grocery price inflation fall at its fastest rate on record in December.

"Despite falls in inflation, an upcoming cut in national insurance rates, and some consumers having more money in their pockets this Christmas than last, the constant drip of economic challenges they’ve faced over the last two years has finally come home to roost.

"As we start a new year, cautious consumers are battening down the hatches and retailers can expect to see significant downward pressures on demand in the opening months of this year, which will ease off by spring if the economic conditions continue to improve and confidence slowly returns."