{"id":216174,"date":"2023-01-20T07:19:04","date_gmt":"2023-01-20T07:19:04","guid":{"rendered":"https:\/\/theindustry.beauty\/?p=216174"},"modified":"2023-01-20T18:15:31","modified_gmt":"2023-01-20T18:15:31","slug":"retail-reacts-to-december-2022-ons-data-festive-period-has-not-been-as-fruitful-as-expected","status":"publish","type":"post","link":"https:\/\/theindustry.beauty\/retail-reacts-to-december-2022-ons-data-festive-period-has-not-been-as-fruitful-as-expected\/","title":{"rendered":"Retail reacts to December 2022 ONS data: \"underlying weakness in the sector\""},"content":{"rendered":"

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.<\/strong><\/p>\n

Retail sales volumes were estimated to have dropped by 1% in December, the second month of decline, the Office for National Statistics (ONS) said.<\/p>\n

The data also 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.<\/p>\n

Key experts across the retail industry reacted to the December 2022 data:<\/b><\/p>\n

Heather Bovill, ONS Deputy Director for Surveys and Economic Indicators:<\/strong><\/h3>\n

\u201cRetail sales dropped again in December with feedback suggesting consumers cut back on their Christmas shopping due to affordability concerns.<\/p>\n

\u201cAfter last month\u2019s boost as shoppers stocked up early, food sales fell back again in December with supermarkets reporting this was due to increased food prices and the rising cost of living. Online sales dipped with feedback indicating postal strikes were leading people towards purchasing more goods instore.\u201d<\/p>\n

\"Silvia

Silvia Rindone, EY UK&I Retail Lead:<\/p><\/div>\n

Silvia Rindone, EY UK&I Retail Lead:<\/strong><\/h3>\n

\u201cDespite indications that consumers might be delaying their Christmas shopping and many stores starting their January sales earlier to entice shoppers, retail sales volumes fell by 1% in December, traditionally the busiest time of year for many retailers.<\/p>\n

\u201cThe ongoing rail strikes and cold snap last month led many consumers to do their Christmas shopping in-store rather than online, with many potentially keen to avoid the disruption caused by postal strikes in the lead up to the festive season. As a result, there was a 2.9% fall in online spending values with the proportion of online sales falling to 25.4% in December from 25.9% in November.<\/p>\n

\u201cTrading updates from retailers over the last few weeks have shown that most \u2013 particularly the big four supermarkets \u2013 performed better than expected and experienced a strong festive peak in sales terms, although it\u2019s worth noting that sales growth has been driven by customers spending more due to inflation rather than buying more.<\/p>\n

\u201cMany consumers also dipped into savings to ensure they had a memorable Christmas \u2013 the first restriction free one since the start of the pandemic. However, now that Christmas is over, consumers will be tightening household budgets and heading into 2023 with less of a financial buffer. Discretionary spending is most likely to be affected in 2023, with EY\u2019s latest Future Consumer Index finding that over half (52%) of consumers surveyed said they will spend less on big-ticket items such as furniture, while 47% say they will spend less on clothing.\u201d<\/p>\n

Cande Cooper, UK Retail Consulting Lead at Deloitte:<\/strong><\/h3>\n

\u201cDecember\u2019s festive period wasn\u2019t enough to boost retail sales as volumes fell by 1.0%, an unexpected deterioration. This marks two consecutive months of retail sales decline in the \u2018Golden Quarter\u2019.<\/p>\n

\u201cWhile there were some winners in the grocery sector, food sales volumes fell 0.3%, with many consumers managing reduced budgets. Price sensitive consumers still made use of the pre- and post-Christmas discounting period by picking up items in the sale, however non-food sales took a significant hit with sales falling by 2.1%.<\/p>\n

\u201cThe outlook for the next twelve months remains difficult for both consumers and retailers. While inflation is beyond its expected peak, it will still be one of the drivers behind retail sales value growth, with costs ultimately being passed on to consumers that could negatively impact demand.<\/p>\n

\u201cMany consumers will continue to adopt recessionary behaviours in 2023, including trading down, switching to cheaper stores, repairing or fixing items, and cutting back on non-essential purchases, especially those requiring financing which will be impacted by high interest rates.\u201d<\/p>\n

Rosalind Hunter, Partner at Simon-Kucher & Partners:<\/strong><\/h3>\n

\u201cThe December fall in retail sales demonstrates that despite many retailers enjoying buoyant holiday sales, there was underlying weakness in the sector as a whole. As we move further into Q1 2023, we expect a further slowdown across the retail landscape as consumers continue to grapple with rising prices, especially food items, and high energy costs. On the upside, we are seeing inflation slowly come down\u2014to 10.5% in December after spiking to over 11% last autumn\u2014along with a drop in wholesale energy prices, although it will take some time before these changes are felt by consumers.<\/p>\n

\u201cMost retailers will be bracing themselves for a difficult year and we expect to see forecasts being scaled back and inevitably, a number of closures announced as the year progresses. Though much of the focus is on inflation and consumer demand, the retail market will continue to face pressures on the cost and operational side.\u201d<\/p>\n

\"CEO

CEO of the British Retail Consortium (BRC) Helen Dickinson OBE<\/p><\/div>\n

Helen Dickinson, CEO of the British Retail Consortium:<\/strong><\/h3>\n

\u201cVolumes fell for the ninth consecutive month as the cost of living squeeze caused consumers to rein in December spending. The high cost of household bills, particularly for energy, and rising food inflation, made for a difficult Christmas backdrop with falling consumer confidence. Nonetheless, increased discounting helped boost gift giving, with stronger sales growth for clothing and furniture.<\/p>\n

\u201cIt is clear that inflation took its toll on the whole of 2022, with retail volumes falling 3.4% over the year, the biggest drop on record*. 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.\u201d<\/p>\n

Samantha Phillips, Partner at McKinsey & Company:<\/strong><\/h3>\n

\u201cChristmas didn\u2019t drive any uptick in sales volumes, as people continued to navigate inflation and balance between spending on themselves and family festivities and presents. Our prior consumer sentiment data revealed that 73% were not going to treat themselves in the run up to Christmas.<\/p>\n

\u201cThe only store sector to have grown in volume in the last three years is clothing, by 2.2% on 2019. That is likely driven by increased promotional activity to carefully manage stock.<\/p>\n

\u201cWhilst this Christmas, food volume was down 3% on 2019, value was up almost 15%. Despite the continued double-digit inflation, families made sure to celebrate together after years of COVID-limitations.\u201d<\/p>\n

Karl Stone, Head of Voyado UK:<\/strong><\/h3>\n

\u201cAfter much anticipation over Christmas holiday spending amongst retailers, the continued pinch of the cost-of-living crisis has further halted consumer spending throughout December, as the negative retail figures persist.<\/p>\n

\u201cIndeed, the festive period has not been as fruitful as expected, and the cold \u201cretail winter\u201d sees non-store retailing volume fall by 0.3% and retail sales decline by 1%. However, clothing store sales saw a small increase of 1% since November.<\/p>\n

\u201cThere is an opportunity for retailers to achieve a clawback during the month ahead. January sales could be a massive opportunity for the high street to capitalise on increased consumer activity. However, to do so, retailers should ensure their new year resolutions focus on developing a strong customer strategy which centres on customer personalisation both instore and online.<\/p>\n

\u201cWhen devising a customer strategy, retailers should consider personalisation, sustainability, clienteling, omnichannel, and social commerce. As the economic crisis continues, retailers with consistent delivery, personalisation and enjoyable shopping experiences will be far better off.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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