BRC-KPMG: Xmas delivers ‘flat but respectable’ sales for retailers

On a total basis, UK retail sales were up 1% last month – marking the slowest December growth since 2008, according to the latest BRC-KPMG Retail Sales Monitor.

BRC-KPMG: Xmas delivers 'flat but respectable' sales for retailers

However, total food sales in December grew for the first time since April. Over the last three months, food showed a decline of 0.3%. The non-food performance was helped by the cyber-week and the end-of-season sales, particularly fashion. Online sales of non-food products grew 7% in December versus a year earlier, when it had grown 19.2%.

Helen Dickinson, director general of the British Retail Consortium (BRC) said: “The figures for December show that the British public were in a shopping mood, with total sales up 1% on the same period last year. The Black Friday feeling continued into early December as customers bagged great deals on their Christmas gifts. The Boxing Day and End of Season sales also contributed to December’s positive performance. It’s also worth noting that this has been the best month for food sales since Easter, with many of us opting increasingly for premium ranges for our festive fare.

“It’s clear that targeted discounting has worked for the UK’s retailers – prices have been cut just enough to encourage customers through the doors but not so much that sales growth has been completely choked off. In one of the most fiercely competitive retail environments in recent years, retailers will be encouraged by the fact that their strategy for December appears to have paid off.”

KPMG head of retail David McCorquodale said: “Extensive discounting disrupted the timing and rhythm of Christmas spending. Between Black Friday and Boxing Day, retailers and consumers engaged in a three week dance, each waiting for the other to take the lead. And as a result, sales suffered.

“It’s now clear that Black Friday did pull festive sales forward into November, and this created a challenging lull in spending, with consumers waiting for future bargains. This situation did not reverse until the week of Christmas. The launch of Boxing Day sales, mixed with new season full price stock, saw some phenomenal spending – with fashion retailers achieving double digit growth.

“The grocers had rather a commendable Christmas, given the persistent price deflation that has dogged the sector throughout the year. Food sales reached a respectable level in December and the three month average has climbed to -0.3%, from a low in September of -1.7%.

“This difficult stop/start sales environment has been undoubtedly challenging, but most retailers have managed to achieve a flat, but respectable, sales performance this Christmas: time will tell on margins. 2015 is likely to bring more of the same, and the big four grocers have already signalled they will cut prices to secure sales. Non-food retailers will fare better, but whilst consumer confidence remains fragile, these too are vulnerable to shocks, be they political or economic.”

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