19 Jan 2018

Dreary December retail sales deliver disappointment

Lower margins and squeezed prices revealed a disappointing end to the Golden Quarter in the December Retail Sales, as it appeared consumers bought their spending forward to November 2017 with events such as Black Friday.

The key findings from the Retail Statistics showed:

  • In the latest three months the quantity bought in retail sales increased by 0.4% compared with the previous three months; while the underlying pattern remains one of growth, this is the weakest quarterly growth since the decline of 1.2% in Quarter 1 (Jan to Mar) 2017.
  • On the month, the quantity bought decreased by 1.5% when compared with strong sales in November 2017.
  • In December 2017, the quantity bought increased by 1.4% when compared with December 2016, with positive contributions from all stores except food stores.
  • For the whole of 2017, the quantity bought in retail sales increased by 1.9%; the lowest annual growth since 2013.
  • In non-seasonally adjusted terms, shopping for Christmas has shifted in recent years from being mainly in December to more in November as consumers seem to be starting their purchasing earlier in line with Black Friday promotions.
  • Internet sales continued to increase when compared with previous years, with physical stores dominating online sales growth in December.

Phil Mullis, Partner and Head of Retail and Wholesale at top-20 UK accountancy firm, Wilkins Kennedy, said: “December’s Retail Sales revealed a disappointing end to the Golden Quarter 2017 with a fall in purchase quantity of 1.5% compared to November 2017. Yes, there was small growth at 0.4% in the last three months compared to the previous three months but the overall trend is downwards.

“We continue to see inflation outstrip wage growth and while this remains it will be difficult for the retail sector to grow.

“Retail health indicators are based on demand, margin and cost. A fall in consumer demand coupled with rising input costs will force retailers to squeeze their profit margins. However, a discount-led purchase model to drive demand is not sustainable, as we have seen recently from the likes of Debenhams and Jaeger before them.

“Pureplay retailers and online purchasing seem to continue to do well, but retailers will need to think about where they fit into the 2018 marketplace in order to remain competitive.”

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