Consumers appear to be sticking to plans for a budget Christmas this year with retail spending remaining weak, figures released on Tuesday morning show.
Total UK retail sales increased by just 2.7% in November, a significant weakening on last November’s 4.2% uplift despite a push from retailers around Black Friday deals, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.
And those figures are not even adjusted for inflation, masking a likely drop in volumes once today’s higher prices are taken into account.
Food and drink, health, personal care and beauty products continued to drive growth, but jewellery and watches took huge hits with the biggest decline in sales on the high street as consumers trend towards more budget-friendly gifting.
BRC chief executive Helen Dickinson said: “Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November.
“While this had the desired effect initially, the momentum failed to hold throughout the month, as many 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.
“Looking ahead to 2024, retailers will have to shoulder many new cost pressures, including a rise to business rates, as well as costs from other new regulations.
“These combined with the biggest rise on record to the National Living Wage will mean retailers will have less capital to invest in lowering prices for their customers.”
Paul Martin, UK head of retail at KPMG, said: “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.
“With two of the three months of the crucial golden quarter seeing sales growth below 3%, it has already been a weak Christmas trading period.”
Mr Martin added: “Any excess stock not sold before Christmas could be further reduced leading to big January sales, and potentially having an even greater impact on already tight margins.
“As we look to the first few months of 2024, we can expect the challenges to continue which could lead to further casualties in the sector, particularly pure online players facing more than 28 months of consecutive sales decline.”