Despite growth dipping below the 12 month average, furniture was the third strongest-performing retail sales category in December, according to the latest BRC-KPMG Retail Sales Monitor. Consumers’ appetite to make big-ticket purchases remained strong, supported by a robust housing market and a growing appetite for credit. Mortgage approvals rose by 17.2% in October, according to the Bank of England.
Home accessories was the strongest-performing category, with sales rising at the fastest rate since January 2014, excluding Easter distortions. For some, the lighting category performed well, helped by demand for Christmas decorations. Additionally, the house textiles category returned to more respectable levels of growth following two tough months, and was the fifth fastest-growing sector overall.
Online, Furniture achieved its fastest growth rate for a December since the monitor began recording online sales in Christmas 2012. According to BRC-KPMG, retailers reported that consumers were placing orders later than usual, and suggested that this reflected increased confidence in retailers’ online delivery systems. Furniture made its second largest contribution on record to non-food sales growth online, and recorded a 2.3% increase in its penetration rate from last year to 23.9%.
Overall, UK retail sales rose by 0.1% on a like-for-like basis from December 2014, when they had decreased 0.4% from the preceding year. On a total basis, sales were up 1%, against a 1% rise in December 2014.
Adjusted for the BRC-Nielsen Shop Price Index deflation, total growth was 3%. Total growth was above the three-month average of 0.9%, but weaker than the 12-month average of 1.7%. On a three-month basis, total non-food sales were up 1.5%, the weakest growth since January 2013.
Online sales of non-food products in the UK grew 15.1% in December versus a year earlier, when they had grown 7%.
Helen Dickinson, chief executive of the BRC, says: “2015 drew to a disappointing close for retailers, with December seeing just 1% sales growth, notwithstanding the strong underlying momentum of an improving consumer environment buoyed by rising real incomes, low inflation and low unemployment. Online performed strongly as consumers embraced the convenience and flexibility that more sophisticated retailers offered. Nevertheless, the boost from online was not enough to make this a Christmas to remember for most retailers. The three month rolling total sales across all categories was the weakest for the entire year, with only 0.9% growth, while non-food saw its slowest performance since January 2013.
“Looking at the year as a whole, the strongest performing categories include those related to the home, supported by a robust housing market, renewed strength in mortgage approvals and a generally healthier appetite among consumer for credit. With price deflation and offers aplenty, the current retail climate is great news for consumers – however, retailers are not benefiting from the improved economic climate in the same way that other sectors have done. This is in part due to changing consumer shopping habits and the rising cost of doing business for retailers such as business rates and the national living wage due to be introduced in April. The Government has a prime opportunity in March’s budget to help UK retailers continue to drive growth in the economy and create new jobs by reducing the disproportionate burden of business rates and keep going with its structural review.”
David McCorquodale, head of retail, KPMG, adds: “Despite a number of positive economic indicators, retail sales over Christmas were relatively flat, with more products on discount and the depth of discounting also deeper. Although retailers tried to tame Black Friday 2015, it still had a significant impact on the shape of sales over the festive season, spreading spend over six weeks rather than two.
“December’s star performer was home accessories, as consumers 'decked the halls' with baubles and fairy lights to get into the festive spirit."
