25 May 2024, 11:54
By Furniture News Jan 09, 2020

BRC-KPMG laments worst retail year on record

BRC-KPMG states that 2019 was the worst year for retail since its records began in 1995, and the first year to show a decline in total sales, which fell by -0.1%, compared with +1.2% growth in 2018.

Across the festive period (the five weeks from 24th November to 28th December), sales increased +1.9% in December (against a flat 0.0% in December 2018). However, the figures were positively distorted by the late timing of Black Friday, so a two-month average represents a more accurate picture of the festive period, states BRC-KPMG – in which case, total sales declined -0.9% YoY.

Using the same basis for comparison, LFL in-store sales declined -1.2% YoY.

Online, non-food sales increased +12.8% in December (against +5.8% in 2018) – but taking November and December together to iron out the Black Friday distortions, sales increased +2.6%, which is lower than the 12-month average of +3.3%. Non-food online penetration rate increased from 31.2% in December 2018 to 34.5%. 

BRC chief executive Helen Dickinson OBE comments: “2019 was the worst year on record and the first year to show an overall decline in retail sales. This was also reflected in the CVAs, shop closures and job losses that the industry suffered in 2019. Twice, the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December General Election - further weakening demand for the festive period.

"The industry continues to transform in response to the changing technologies and shopping habits. Black Friday overtook Christmas as the biggest shopping week of the year for non-food items. Retailers also faced challenges as consumers became both more cautious and more conscientious as they went about their Christmas shopping.    

“Looking forward, the public’s confidence in Britain’s trade negotiations will have a big impact on spending over the coming year. There are many ongoing challenges for retailers – to drive up productivity, continue to raise wages, improve recyclability of products and cut waste. However, this takes resources, so it is essential the new Government makes good on its promise to review, and then reform the broken business rates system, which sees retail pay 25% of all business rates, while accounting for 5% of the economy.”

Paul Martin, UK head of retail for KPMG, adds: “At first glance, retailers’ relentlessness paid off in December, with total sales up +1.9%. However, the later timing of Black Friday will have skewed the outcome. If looking at November and December combined, sales actually declined by -0.9%.

“Consumers clearly favoured logging on to walking in, with online sales up +12.8% in December. However, if taking a two-month average, growth online was clearly muted at only +2.6.%.

“All growth will be welcome, although the true performance of Christmas trading is still to be determined. The cost of customer returns must not be overlooked. That’s especially true as online fulfilment already costs retailers a pretty penny. Christmas trading reports will likely be mixed, but those that have truly performed well will have managed margin and costs well over both the Christmas period and beyond.” 

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