senior couple doing christmas shopping with empty bag

BRC, The British Retail Consortium, reports that holiday sales by retailers only saw a 0.6 percent increase over 2016 on a like-for-like basis. That marks a decrease in growth over last year, where retailers saw a 1 percent increase in the same metric over 2015 sales.

On a total basis, retail sales rose 1.4 percent in December, which is also down from last year’s 1.7 percent increase. BRC states this is consistent with the 3-month and 12-month averages of 1.1 percent and 1.5 percent respectively.

But most troubling for the UK retail sector is that three months to December 2017, in-store sales of non-food items declined 3.7% on a total basis and 4.4% on a like-for-like basis.

This is the deepest decline since December 2012, when BRC records began to track this metric. And on a 12-month basis, the total decline was 2.2%.

“There was both light and dark in this year’s Christmas trading period. Growth in spending was in line with the, albeit modest, average for the year. However, the divergence between growth in sales of food and non-food has never been so stark.

Helen Dickinson OBE, Chief Executive, British Retail Consortium

Dickinson also commented that with inflation outpacing income growth, shoppers continued to see more of their ‘disposable income’ absorbed by essential items such as food.

eCommerce vs High-Street

Continuing the global trend of eCommerce taking market share from high-street, online retail rose 7.6 percent during the holiday season.

“Whilst a proportion of this divide can be attributed to Cyber Monday, shoppers are increasingly preferring to shop online, especially at Christmas.”

Paul Martin, Head of Retail, KPMG

Changing shopper behaviour is a struggle for high-street retailers. December footfall decreased sharply by 3.5 percent, the biggest decline since March 2013.

The December monthly YoY figure was significantly below the three-month rolling average of -1.9% and the twelve-month rolling average of -0.7%.

Whilst all regions were impacted by the decline in footfall, Scotland (4.7%), South West (5.2%) and Greater London (3.7%) experiences the sharpest reductions.

“The sharp drop in footfall this December, while sales grew overall, underlines how shopping is being transformed by the shift to online. In the past, shoppers would have exclusively visited physical stores to ensure stockings were filled for Christmas. Improved delivery options by both purely digital retailers and those with stores and an online offer mean many purchases of last minute gifts are moving online.

Helen Dickinson OBE, Chief Executive, British Retail Consortium

Whilst the US and Australia report record sales and increases, UK retailers are still suffering from the uncertainty of BREXIT and an anaemic economy.

Despite recent good news that the important financial sector in London will suffer far fewer job losses, the negotiations with the EU on BREXIT are still labouring and slow.

Hopefully 2018 will bring more clarity and improve the overall economic situation. However, high-street will need to invest into eCommerce if it wants to stay relevant, or it may face similar store closure rates that afflict many large U.S. retailers.

How was your Christmas season? We welcome your thoughts in the comments section below.

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