Discounts and multi-channel deliver Christmas cheer, latest BRC-KPMG Retail Sales Monitor finds

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UK retail sales declined by 0.4%, on a like-for-like basis from December 2013, when they had increased 0.4% on the preceding year, according to the December BRC-KPMG Retail Sales Monitor.

On a total basis, sales were up 1.0%, against a 1.8% rise in December 2013. This is the slowest December growth since December 2008.

Adjusted for the BRC-Nielsen Shop Price Index, total growth was 2.6% (rounded), matching the December 2013 level, which was the highest since December 2009.

In December total food sales 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 in the UK grew 7.0% in December versus a year earlier, when it had grown 19.2%. The non-food online penetration rate was 17.0%, up from 16.0% in December 2013.

Helen Dickinson, director general, British Retail Consortium, said: “The figures for December show that the British public were in a shopping mood with total sales up one per cent 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 their strategy for December appears to have paid off.”

David McCorquodale, head of retail, KPMG, 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.”

Food & drink sector performance

Joanne Denney-Finch, chief executive, IGD, said: “After a challenging year, food and drink companies will be heartened to see modest year-on-year growth in December – especially as the prices of many food and drink items fell, making growth difficult to achieve.

“This gives cause for some cautious optimism in 2015, with shoppers also telling us they have a more positive outlook. A fifth of them (19%) feel they’ll be better off in the year ahead, almost twice the amount who said the same in January 2011.”