Worst Christmas for Retail since 2008, tough times for Retail continue.
Covering the five weeks 25 November - 29 December 2018
• On a total basis, sales were a flat 0.0% in December, against an increase of 1.4% in December 2017. This is the lowest growth since April, excluding Easter distortions, and below the 3-month and 12-month averages of 0.5% and 1.2% respectively. This is also the worst December performance since 2008.
• In December, UK retail sales decreased by 0.7% on a like-for-like basis from December 2017, when they had increased 0.6% from the preceding year.
• The 12-month average for 2018 saw sales rise by 1.2% on a total basis. This was comprised of 3.1% rise in Food sales and -0.3% Non-Food sales on a total basis.
• Over the three months to December, In-store sales of Non-Food items declined 2.8% on a Total basis and 3.9% on a Like-for-like basis. This is below the 12-month Total average decline of 2.5%. The decline of the month was the worst since April in both Total and like-for-like terms.
• Over the three months to December, Food sales increased 0.6% on a like-for-like basis and 1.8% on a total basis. This is below the 12-month Total average growth of 3.1%.
• Over the three-months to December, Non-Food retail sales in the UK decreased 1.2% on a like-for-like basis and 0.4% on a Total basis. This is below the 12-month Total average decrease of 0.3%. December Non-Food sales experienced a decline.
• Online sales of Non-Food products grew 5.8% in December, against a growth of 7.6% in December 2017. This is above the 3-month average of 5.5% but below the 12-month average of 6.9%.
• Online penetration rate increased from 29.1% in December 2017 to 31.2% last month.
Paul Martin, UK Head of Retail |KPMG:
“Retailers experienced little festive cheer this year, with total sales in December delivering zero growth on last year. This comes despite some retailers desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers.
“Growth in food did provide a glimmer of hope, being among the few categories to notice an uptick. However, the continued contrast in performance between the high street and online remained evident in December - albeit 2018 did also see a continued slowdown in online retail sales.
“The first months of 2019 will unlikely hold much improvement. As many retailers report their festive trading performance, the list of winners and losers will become clear, but winning means more than just improving sales. Retailers have to protect their margins in order to deliver a profitable festive season.”
Helen Dickinson OBE, Chief Executive | British Retail Consortium:
“Squeezed consumers chose not to splash out this Christmas with retail sales growth stalling for the first time in 28 months. 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.
“The retail landscape is changing dramatically in the UK, while the trading environment remains tough. Retailers are facing up this challenge but are having to wrestle with mounting costs from a succession of government policies – from the Apprenticeship Levy, to higher wage costs, to rising business rates.
“Retail makes up 5 per cent of the economy, yet pays 10 per cent of all business taxes and 25 per cent of all business rates. This is neither fair nor sustainable. The Government should urgently look into reforming the broken business rates system and champion the future of retail in the UK.”
Food & Drink sector performance | Jon Woolven, Strategy and Innovation Director | IGD
“Despite the challenges elsewhere in retail, the grocery sector enjoyed a positive December, with an increase in sales on the previous year broadly in line with inflation.
“The desire to indulge over Christmas prevailed once more and seven in ten shoppers said they spent extra on higher quality food last month.
“However, that mood appears fragile with only 20 per cent of shoppers expecting to be better off financially over the next twelve months, the lowest level of confidence by this measure since June 2017.”
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About the British Retail Consortium
The BRC’s purpose is to make a positive difference to the retail industry and the customers it serves, today and in the future. Retail is an exciting, dynamic and diverse industry which is going through a period of profound change. The BRC is committed to ensuring the industry thrives through this period of transformation. We tell the story of retail, work with our members to drive positive change and use our expertise and influence to create an economic and policy environment that enables retail businesses to thrive and consumers to benefit. Our membership comprises over 5,000 businesses delivering £180bn of retail sales and employing over one and half million employees.
About KPMG in the UK
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