According to Helen Dickinson, chief executive of the
British Retail Consortium (BRC), continued higher cost of living accompanied
with weak consumer demand dampened sales, while milder temperatures hit
clothing sales, particularly winter and footwear.
BRC reported that UK total retail sales, increased by 1.2% year-on-year in January, against a growth of 4.2% in January 2023. This was below the three-month average growth of 1.9% and below the 12-month average growth of 3.4%.
While, non-food sales, which includes
clothing sales, decreased 1.8% year-on-year over the three months to
January, against a growth of 2.9% in January 2023.
BRC noted this to be steeper than the
12-month average decline of 0.5%. For the month of January, Non-Food was in
During the three-month period leading up to
January, in-store non-food sales experienced a 1.5% year-on-year
decline, contrasting with a 7.2% growth recorded in January 2023.
This figure falls short of the 12-month
average growth rate of 0.8%.
In January, online non-food sales saw a
year-on-year decrease of 4.2% compared to a 4.1% decline in January 2023. This
decline was more pronounced than the three-month decrease of 2.3% and the
12-month decline of 2.8%.
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Based on data from BRC, the proportion of
non-food items bought online (penetration rate) dipped to 35.0% in January,
down from 35.4% in January 2023.
Dickinson pointed out that easing inflation
and weak consumer demand led retail sales growth to slow, while the January
sales helped to boost spending in the first two weeks, this did not sustain
throughout the month.
She continued: “Larger purchases, such as
furniture, household appliances, and electricals, remained weak as the higher
cost of living continued into its third year. The milder temperatures meant
clothing sales performed poorly, particularly winter clothing and footwear. It
was better news for health and beauty products, which continued to sell
“With the Spring Budget in sight, and a
general election looming, government cannot afford to ignore the needs of
retailers and their customers. Employing three million people and supporting
families and communities in every corner of the country, retail is the
‘everywhere economy’. By addressing the cumulative burdens, from business
rates’ rises, to ill-conceived new recycling proposals to border control costs,
the next government can unlock retail investment and boost local and national
Linda Ellett, UK head of consumer markets,
leisure & retail at KPMG, echoed the same sentiments. She believes it may
be a new year, but the “hangover of low consumer confidence” remains, with
retail sales growing by a lacklustre 1.7% on the high street, and online
operators seeing yet another month of negative sales performance.
Ellett said: “Health and beauty purchasing
continued to drive sales both on the high street and online, whilst sun seekers
and consumers with healthy resolutions front of mind, gave a boost to sports
and travel equipment sales, which were up over 4% year on year.
“The extraordinary weather conditions across
large parts of the country did little to encourage shoppers out on to the high
street, whilst continued industrial action on the rail network was unhelpful
for city centre locations. Whilst there are some positive signs that mortgage
rates are starting to fall and stabilise, and shop inflation has fallen to its
lowest level in over a year, the feel good factor has yet to materialise at the
“It remains a difficult environment for
retailers facing into significant downward pressures on demand, a strong
promotional environment and uncertainty hitting supply chains due to rising
geopolitical tensions. Retailers will be hoping that continued good news
on the economy, coupled with the small boost given to some consumers as cuts in
national insurance start to feed through to pay packets, will boost confidence
and convert to sales. With increases in labour costs and business rates
around the corner, retailers will be hoping for good news in the Chancellors’
upcoming Budget to give consumers that lift they need to start spending again.”
Sarah Bradbury, CEO of IGD, highlighted that
households have had to be mindful with their spending in January with nearly a
third of households with children at home claimed to have bought on credit over
Bradbury added: “So some households –
particularly less affluent ones – will likely cut back a little to pay off this
festive spending. While wage growth is now ahead of inflation, it will be
some time before real incomes recover to their pre-crisis levels and consumer
spending fully recovers.”
By Just Style