On a total basis, retail sales were flat in December, against an increase of +1.4% in December 2017, reports the latest BRC-KPMG Retail Sales Monitor, which covers the five weeks from 25th November to 29th December 2018.
This was the lowest growth since April (excluding Easter distortions) and below the three-month and 12-month averages of +0.5% and +1.2% respectively. It was also the worst December performance since 2008.
Although furniture was the fifth best-performing category (up from 10th YoY), it was second only to sales of clothing in terms of online growth (up forom ninth YoY).
UK retail sales decreased by -0.7% on a LFL basis from December 2017, when they had increased +0.6% from the preceding year. Online sales of non-food products grew +5.8%, while online penetration rate increased from 29.1% in December 2017 to 31.2% last month.
Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), says: “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 10 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%of the economy, yet pays 10% of all business taxes and 25% 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.”
Paul Martin, UK head of retail for KPMG, adds: “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.”