In December 2022, retail sales volumes experienced a decline of 1.0%, following a decrease of 0.5% in November 2022. Retail sales values also decreased by 1.2% in December 2022, after a rise of 0.5% in November 2022.
When looking at the pre-COVID-19 level in February 2020, total retail sales had a value growth of 13.6%, but a decrease in volumes by 1.7%. Additionally, compared to the same period in the previous year, retail sales volumes fell by 5.7% in the three months leading up to December 2022, while sales values increased by 4.5%.
Spending in non-food shops decreased by 2.1%. Food sales, on the other hand, had a smaller decline of only 0.3%. Grocery sales had seen an increase of 1% in November, which some believed was due to consumers purchasing early for Christmas. However, online retailers were affected by the postal strikes, raising concerns about delayed deliveries.
Charlie Huggins, Head of Equities at Wealth Club commented: “The decline in retail sales volumes accelerated in December, with consumers starting to cut back on spending because of increased prices and affordability concerns.
Online sales were particularly weak as the absence of lockdown restrictions, and the Royal Mail strikes encouraged more last minute shoppers into stores.
However, the real test for retailers will be what happens in 2023.
Pressure on UK consumers is mounting and is likely to build in the coming months. With many people on fixed rate mortgages, the impact of interest rate rises has yet to be really felt.
It’s times like these that tend to sort the wheat from the chaff. Retailers must be able to generate profit and cash, while offering customers value for money. If not, they risk following the same path as Joules and Made.com.”
