Retail sales unexpectedly fall amid ‘poor’ supermarket sales

Retail sales fell 0.3% in December according to the latest figures from the Office for National Statistics. It follows a 0.1% increase in November, revised down from a previous estimate of a 0.2% rise. Analysts had been expecting sales to rise by 0.4% in the run up to Christmas as people stocked up for the holiday. The ONS stated that food sale volumes, mainly from supermarkets, were down 1.9% in the period, while non-food stores were up 1.1%. Despite this, one of the strongest performers were clothing retailers, with sales volumes rising 4.4%. Hannah Finselbach, ONS senior statistician, said: “Retail sales fell in December following last month’s slight increase. This was driven by a very poor month for food sales, which sank to their lowest level since 2013, with supermarkets particularly affected.” Kris Hamer, director of insight at the British Retail Consortium, added: “Retail sales picked up in December, but this unfortunately did not offset the shaky start to the ‘Golden Quarter’. In non-food, electricals, beauty and books made for popular presents. Meanwhile, sales of furniture and other large ticket items were hard hit as families continued to think twice before making larger purchases, and clothing and footwear sales remained muted. “While retailers welcome this boost to sales, it will barely touch the sides of the £7bn in new costs from the Budget facing the industry in 2025. Higher employer national insurance contributions, higher National Living Wage, and a new packaging levy will heap pressure on an industry that is already paying more than its fair share of tax. With retailers doing all they can to absorb existing costs, two thirds of CFOs report they are left with little choice but to increase prices, and reduce investment in jobs and shops. To mitigate this, the Government must ensure that its proposed business rates reform does not result in any shop paying higher rates than they already do.” Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, saidd: “Despite record-breaking sales for some retailers over Christmas, plus the later than usual Black Friday event, it was a disappointing end to 2024 for the sector. A lacklustre Golden Quarter is particularly concerning after a tough year as retailers would have been hoping for a Christmas boost. However, retail sales excluding fuel did increase 2.9% year-on-year due to poor sales figures in December 2023. “Many retailers had little choice but to launch their Boxing Day discounting early to maximise sales and clear as much stock as possible ahead of the seasonal slowdown in January. However, without the ‘golden’ boost to sales many retailers will find it difficult to navigate the imminent headwinds post-Budget and we could see prominent brands struggle to compete in 2025.”

Retail sales unexpectedly fall amid ‘poor’ supermarket sales

Despite this, one of the strongest performers were clothing retailers, with sales volumes rising 4.4%

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