The crucial pre-Christmas shopping period failed to be a gift for retailers, as consumers reined in spending on presents, preferring instead to spend their money on going out, according to the latest surveys.
Christmas parties and cinema releases such as Wonka spurred spending in December, while the yuletide shopping frenzy “fizzled”, according to Barclays spending figures.
Meanwhile, the British Retail Consortium said spending was held back by weak consumer confidence.
Total UK retail sales increased by 1.7% in December year on year, against a growth of 6.9% in December 2022.
These numbers are below the three-month average growth of 2.3% and fall short of the 12-month average growth of 3.6%. The BRC said that volumes probably fell once inflation was accounted for.
“The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continued to hold back spending,” the BRC chief executive, Helen Dickinson, said.
“The post-Christmas sales were unsuccessful in enticing spend in areas such as furniture and homeware, with households remaining cautious about making larger purchases.”
She said 2024 “looks to be another challenging year” for retailers and their customers, as spending will continue to be constrained by high living costs.
Barclays said consumer card spending increased by 2.3% year on year in December, lower than November’s growth of 2.9%, as retail spending failed to maintain the momentum it had built up in November through early seasonal discounts. It was lower than the current annual inflation rate of 3.9%, suggesting sales volumes fell.
Spending on digital content and subscriptions, such as on-demand films or services such as Netflix and Apple TV Plus, rose by 11.6% during the festive period as some streaming platforms increased their prices.
“Hospitality and leisure businesses will be encouraged by December’s strong growth, particularly in the entertainment category, which saw growing demand for live shows, new films and TV series,” the Barclays head of retail, Karen Johnson, said.
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“Meanwhile, grocery and retail spending didn’t see as much of an increase as we might have expected during the height of the festive season. This is likely due to many retailers and supermarkets starting discounts and promotional activity earlier than usual.”
Spending on essential items slowed from November’s 3.3% uplift to 1.8%, driven by a 12.5% fall in fuel spending because of falling prices, while slowing food inflation meant supermarket shopping rose 2.8% year on year, the lowest increase since September 2022.
On the other hand, specialist food and drink stores including butchers and delicatessens enjoyed a 5.1% uptick as consumers chose to invest in premium, seasonal ingredients and support their local businesses in the run-up to Christmas.
Clothing and department stores fell back into decline – down 2% and 0.2% respectively – after a rise in November, probably due to retailers starting their festive promotional activity earlier in November rather than December.
In contrast, spending on entertainment and travel soared by 12.3% and 14.1% respectively as consumers booked experiences and getaways for 2024.
