Sophie Michael, Head of Retail at BDO, looks at December’s high street sales figures and sees UK retailers struggling to attract Christmas shoppers to the stores.

UK retailers continue to feel the effects of crumbling consumer confidence, as the last minute Christmas dash failed to save falling retail sales in December.

Overall like-for-like high street sales dropped -2.3% in December – the fifth successive December to record negative sales growth.

Homewares sales grew by 2.5% in December as families splashed out to get ready for festivities, but sales of lifestyle goods struggled to grow at all (up 0.3%).

Consumer confidence is low, and shoppers have exercised extreme caution or shopped strategically online (non-store sales grew 21.4% during December), rather than visiting bricks-and-mortar stores or making impulse purchases.

Retailers, and in particular fashion retailers, have felt a fall in footfall and consumer spend as they recorded a sales dip of -3.8% for December. It marked the third month in a row of negative growth for fashion sales, and the eighth month of the year where fashion sales failed to record any growth.

A last minute Christmas buying spree saw all categories record year-on-year growth in the week ending on Christmas Eve, following the first three weeks of December delivering negative like for like sales.

But the cheer was short-lived as early reports indicate that post-Christmas sales are not particularly promising with Boxing Day expected to show the biggest decline in footfall since 2012.  This will be of concern for those retailers who are struggling to find that crucial mix of product, price and in-store experience to attract the shrinking consumer purse.

Where next?

We cannot ignore the impacts resulting from the political and economic uncertainty which weighed heavily on the UK economy throughout the year.

While we expect that the cost effects of inflationary pressures will ease, sector transformation brought about by technological disruption and a new consumerism will continue to provide both challenges and opportunities to retail – and if the recent past is anything to go by, at an increasing pace.

Retailers should now focus their 2018 efforts on embracing new tools and technology to get to know not only the consumer of today, but understanding who that customer will be tomorrow.

Sophie Michael is Partner and Head of Retail and Wholesale at BDO.

“The level of disposable income has been gradually falling in 2017 as inflation has now overtaken wage growth.  With discretionary spend under pressure, shoppers have been forced to think twice before making their purchases and have shown a preference to  prioritise spend on food and drink, home comforts and trips out to restaurants and bars this festive season.”

Sophie Michael, Partner and Head of Retail and Wholesale, BDO

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