Mark Sweney and Sarah Butler 

Food stores in Great Britain have worst Christmas since 2013

Overall retail sales volumes fall by 0.3% in December amid weak ‘golden quarter’ of trading
  
  

A customer looks at chocolates for sale in a supermarket in Manchester in December 2024
Supermarket sales volumes dropped by 1.9% month on month to their lowest level in more than a decade in December. Photograph: Phil Noble/Reuters

Retailers in Great Britain experienced a surprise fall in sales volumes last month, as supermarkets and other food stores had their worst Christmas since 2013, according to official figures.

The Office for National Statistics (ONS) said sales volumes fell 0.3% month on month in December, as the crucial retailing “golden quarter” of trading for the sector proved to be weak this year. Economists had expected sales to grow 0.4%.

The ONS figures showed the decline in December sales was led by food stores, and in particular supermarkets, where volumes dropped by 1.9% month on month to their lowest level in more than a decade.

Sales volumes also fell in specialist stores, such as butchers and bakers, and alcohol and tobacco stores, including vaping shops.

“Retail sales fell in December driven by a very poor month for food sales, which sank to their lowest level since 2013, with supermarkets particularly affected,” said Hannah Finselbach, a senior statistician at the ONS.

This was partly offset by a strong 4.4% rise in sales at textile, clothing and footwear stores, the biggest monthly rise in the retail sector, while department stores also experienced a 1.2% month-on-month sales boost.

The figures mark a significant turnaround for clothing stores, which had been hit by monthly sales declines of 3.5% in November and 3.3% in October.

“It was a better month for clothing shops and household goods stores, where retailers reported strong Christmas trading,” Finselbach said.

The ONS figures showed that the value of retail sales grew 3.5%, indicating that price rises fuelled a solid Christmas performance for some retailers despite the drop in the volume of sales.

The Black Friday sales, which fell on 29 November and within the ONS figures for December, failed to spark a boost in sales volumes in last month’s figures as many retailers started their discounts well in advance of the actual day.

This strategy boosted sales figures in November. However, the ONS has now revised the 0.2% month-on-month rise that month down to only 0.1%.

Overall sales across the golden quarter, the key Christmas shopping season when many high street retailers make all or most of their annual profits, fell by 0.8% compared with the July to September period.

However, the ONS said retail sales volumes in the final quarter of 2024 were up 1.9% on the same period in 2023.

“The golden quarter proved unworthy of the name as the sun set on what was a challenging year for the retail industry in 2024,” said Asif Aziz, the retail director at the mobile phone retailer and operator EE. “As we move into 2025, we anticipate continued cautious spending from households in the face of economic uncertainty.”

The British Retail Consortium said the December boost did not make up for weaker performance in the previous two months, and that retailers would struggle when measures in Labour’s budget came into force in April.

“Retail sales picked up in December, but this unfortunately did not offset the shaky start to the golden quarter,” said Kris Hamer, the director of insight at the BRC. “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.”

However, Matt Swannell, the chief economic adviser to the EY Item Club, said seasonal spending and shifts in consumer habits had introduced “large volatility” into the December figures published by the ONS.

“The EY Item Club wouldn’t recommend reading too much into December’s [volume sales] fall,” he said. “However, when considering the last three months, the picture remains soft.”

The downbeat ONS figures for supermarkets contrast with a slew of upbeat Christmas trading updates from chains including Tesco, Sainsbury’s, Aldi and Lidl.

Industry data from analysts at Kantar and Nielsen also indicated a strong end to the year for food retailers while most independent studies showed that the clothing market had a difficult end to the year.

The ONS numbers differ significantly, partly because they are “seasonally adjusted”, a particularly tricky statistical effort in 2024 when the timing of Black Friday, a key event, shifted about a week later, while Christmas Day was two days later in the week than the prior year because of the leap year – another influence on buying patterns.

The focus on volumes, instead of the total value of sales, also provided a differing picture to other updates as inflation on food boosted the value of goods sold while heavy discounting cut clothing retailers’ margins but boosted sales volumes.

 

Leave a Comment

Required fields are marked *

*

*