UK Retail Sales Up by 2.2pc Last December
UK retail sales values were 2.2% higher on a like-for-like basis from December 2010, when sales had fallen 0.3%, hit by snow, according to BRC-KPMG Retail Sales Monitor December 2011.
On a total basis, sales were up 4.1%, against a 1.5% increase in December 2010. On both measures and excluding Easter distortions, sales performance was the best since January.
Food sales growth picked up strongly and non-food also improved, but with sales often promotion-led. Clothing and footwear showed good gains on last December’s weak sales. Homewares improved but big-ticket items and furniture sales remained down on a year ago, hit by consumer caution.
Non-food non-store (internet, mail-order and phone) sales growth picked up sharply from November’s low. Sales were 18.5% up on a year ago, double November’s gain but similar to the 18.0% in December 2010.
Stephen Robertson, Director General, British Retail Consortium, said: “A better than hoped-for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors. We’re not witnessing any fundamental change in customers’ circumstances.
“The comparison is with severe snow disruption a year ago. Discounting was deeper and started earlier and the vital Saturday Christmas-Eve added another big trading day to the final run-up. Post-Christmas offers brought large numbers of shoppers out but that was generally a short-lived hunt for bargains. With discounting driving sales at the expense of margins the key question for retailers is about earnings from those sales.
“A solid December result hasn’t rescued a pretty miserable year. Whole-year figures show minimal growth in 2011. For many customers, economic reality has bitten again since the New Year and, with consumer confidence returning to levels last seen during the recession, 2012 is expected to be an equally challenging year.”
Helen Dickinson, Head of Retail, KPMG, said: “December’s figures saw retailers achieve a 2.2 per cent increase in like-for-like sales, albeit against a background of heavy discounting and long opening hours. The month’s figures saw the strongest growth in food sales of the year as people spent on food for the big day. Clothing and footwear also had a spectacular month. Deals helped consumers finally upgrade winter wardrobes as winter commenced in earnest.
“Whilst these results must be viewed in a positive light, it must also be noted that they have come at the end of a year which witnessed declines in most non-food sectors and are against December 2010’s weak results, which saw sales badly affected by poor weather. Sadly no-one expects this level of demand to be indicative of the year ahead.”
Joanne Denney-Finch, Chief Executive, IGD, commented on the food and drink sector: “On the face of it, food and drink sales in the lead-up to Christmas were good, indicating shoppers were determined to enjoy their festive fare.
“But several specific factors helped. Christmas fell on a Sunday, the first time this has happened since 2005, allowing consumers to make the most of the six shopping days before the 25th. They also took advantage of more stores opening on Boxing Day and milder weather compared with last year’s wintry conditions.
“The challenging trading environment that characterised 2011 looks set to continue. Success in 2012 will require firms to ensure they adapt quickly to shoppers’ changing habits.”
On Non-Food Non-Store, Stephen Robertson, Director General, British Retail Consortium, said: “These are buoyant figures. The year’s biggest month for spending on non-food goods produced the best online sales growth for over a year.
“This is a return to a stronger growth rate, more typical of those seen in 2010. It’s coming from the underlying structural growth of multi-channel retailing combining with extra Christmas demand, offers such as free delivery, a pre-Christmas start to some sales and the absence of last year’s transport disruption.
“This was the highest spending online Christmas yet but online is a relatively small part of overall retailing and the money worries that affected consumers last year have not gone away.”
The BRC-KPMG Retail Sales Monitor measures changes in the actual value (including VAT*) of retail sales, excluding automotive fuel. The Monitor measures the value of spending and hence does not adjust for price or VAT changes. If prices are rising, sales volumes will increase by less than sales values. In times of price deflation, sales volumes will increase by more than sales values.