Christmas crash: Worst festive trading for retailers since the financial crisis, leading index shows, as High Street woes roll on
- Retail sales growth flatlined in December making it the worst xmas in a decade
- According to an index, sales showed 0% growth year-on-year
- The report said bumper price cuts had not done enough to lure shoppers
Retailers suffered the worst Christmas since 2008 and the financial crisis, a leading index has found, as even frantic discounting failed to lure shoppers in December.
Sales growth flatlined last month, showing 0 per cent growth year-on-year, according to the closely followed British Retail Consortium-KPMG retail sales monitor.
Last Christmas, the index registered total sales growth of 1.4 per cent year-on-year, but retailers were unable to keep up that pace this time around, even with heavy price cuts.
Retail sales failed to grow year-on-year in December making it the worst Christmas for 10 years
On a same-store basis, UK retail sales slipped 0.7 per cent, compared with a 0.6 per cent uplift in December 2017.
BRC boss Helen Dickinson put it down to shoppers being more cautious about how they spent their money in the uncertain run-up to Brexit, and warned that things could get worse for retailers in 2019.
‘Squeezed consumers chose not to splash out this Christmas, with retail sales growth stalling for the first time in 28 months,’ she said.
‘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.’
Another trend the report flagged was the growing disparity between online firms and traditional bricks-and-mortar players.
Paul Martin, UK head of retail at KPMG, said: ‘Retailers experienced little festive cheer this year […] despite some desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers.
‘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.’
Online penetration rate increased from 29.1 per cent in December 2017 to 31.2 per cent last month.
While online was still in growth, the pace has slowed down over the course of the year
Martin added that the food sector, buoyed in-part by lower inflation, ‘did provide a glimmer of hope’ as one of the few categories to register an uptick.
A separate report from Barclaycard said consumer spending grew 1.8 per cent year-on-year in December, which marks the slowest growth rate seen since March 2016.
Barclaycard said essential spending growth dipped to just 0.6 per cent, driven by a contraction in supermarket spending.
KPMG said the food sector performed better than others over Christmas
Esme Harwood, director at Barclaycard, said: ‘Consumers ‘remain cautious amidst ongoing economic uncertainty.’
The figures come in a busy week of retail updates which have so far painted a mixed picture of the health of the High Street.
Morrisons and Sainsbury’s both disappointed investors, while Next registered a strong rise online and Joules and Ted Baker unveiled double-digit sales rises.
Retail stalwarts Tesco, M&S, Debenhams and John Lewis are set to release Christmas trading figures on Thursday, with analysts eager to learn how the industry giants fared at the end of a torrid 2018.
BRC-KPMG and IGD data breaking out sales difference category by category