UK retailers hopeful of end of year ‘flurry’ following November slowdown
5-12-2023
UK RETAILERS HOPEFUL OF END OF YEAR ‘FLURRY’ FOLLOWING NOVEMBER SLOWDOWN
UK retail sales witnessed a 2.7% increase in total retail sales in November, a slight slowdown compared to the 4.2% growth recorded in the same period last year as Black Friday momentum failed to hold out due to cautious consumers delaying Christmas spending.
The 2.7% increase in UK retail sales exceeded the 3-month average growth of 2.6% but fell below the 12-month average growth of 4.1%, according to the BRC-KPMG Retail Sales Monitor (RSM), which is an accurate monthly measure of UK-wide retail sales performance over the four weeks 29 October to 25 November.
Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), commented on the trends and highlighted that because of Black Friday starting earlier this year many retailers tried to give sales a much-needed boost in November which initially had a desired effect as Health and Beauty products showed stronger growth.
However, the momentum of the event did not hold throughout the month as households held back on Christmas spending.
“Retailers are banking on a last-minute flurry of festive frivolity in December and will continue working hard to deliver an affordable Christmas for customers so everyone can enjoy some Christmas cheer,” said Dickinson.
November UK retail sales summary:
• Non-food sales decreased by 1.6% on a Total basis over the three months to November. This is below the 12-month average growth of 0.5%. For the month of November, Non-Food was in decline year-on-year.
• In-store non-food sales decreased by 0.8% on a Total basis since November 2022. This is below the 12-month average growth of 0.6%.
• Online non-food sales decreased by 2.1% in November, against a decline of 0.4% in November 2022. This was shallower than the 3-month decline of 2.8% and deeper than the 12-month decline of 3.0%.
• The proportion of non-food items bought online (penetration rate) decreased to 41.4% in November from 41.6% in November 2022.
Looking ahead, Dickinson mentioned the challenges retailers could face in 2024, including increased business rates and costs from new regulations, coupled with the largest rise on record to the National Living Wage. This, she noted, would leave retailers with less capital to invest in lowering prices.
Paul Martin, UK head of retail at KPMG, shared his insights, and said “With the clock ticking down to Christmas, sales growth in November remained weak at 2.7%, despite a big push from retailers around Black Friday deals.”
Martin suggested that consumers are “abandoning expensive presents in favour of more budget-friendly gifting.”
Online sales fell again, but penetration rates rose to 41.5%, reflecting increased Black Friday bargain hunting.
Martin noted: “With less than a month to go and sales growth limping along, the cost-of-living crisis has taken its toll on Christmas spending for many households, and the continued economic conditions are testing consumer resilience.”
He also predicts a prolonged period of targeted discounting as retailers compete for a shrinking spending pool and clear stock.
Martin echoed Dickinson’s predictions of a challenging few months of 2024 and said it could lead to “further casualties in the sector, particularly pure online players facing more than 28 months of consecutive sales decline.”
In the face of a challenging retail environment, Steve Ponting, director at Software AG, highlighted the importance of data-driven decisions and operational efficiency for retailers.
Ponting also emphasised the need for excellent customer experiences both in-store and online to retain customers and navigate the evolving market dynamics.
By Just Style
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