In December 2023, the UK retail sector faced a notable downturn, marking the most significant decrease in retail sales volumes since the COVID-19 pandemic restrictions in January 2021. The Office for National Statistics (ONS) reported that retail sales volumes saw a decrease of 3.2%, contrasting with the 1.4% increase in November. This period highlighted a shift in consumer shopping habits, with many opting to complete their Christmas shopping in November, leveraging Black Friday deals.
The ONS data further illustrates the extent of the downturn. Sales volumes hit their lowest level since May 2020, with a month-on-month decline of 3.2%. This was the largest monthly fall since January 2021, when tighter nationwide coronavirus restrictions affected sales. The three-month on-three-month volumes fell by 0.9%, continuing the trend of recent months.
The decline was comprehensive across all main sectors. Total non-food store sales volumes fell by 3.9%, with department stores experiencing a significant 7.1% decrease in sales volumes. Other non-food stores, including those selling sports equipment, games, toys, watches, and jewellery, saw a 4.5% decline. Clothing stores and household goods stores also reported reductions in sales volumes, by 1.5% and 3.0% respectively. The food stores sector was not spared either, registering its largest monthly fall in sales volumes since May 2021, with a 3.1% decrease.
The online retail sector saw its share of challenges as well. Online sales fell by 1.7% from November to December 2023, with declines across all sectors except non-store retailing. Despite this, the proportion of online sales in the total retail sector rose slightly from 26.6% in November 2023 to 27.1% in December 2023. This figure is substantially above pre-pandemic levels, which stood at 19.7% in February 2020.
Industry experts shared their perspectives on these developments. Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented: “Retail sales volumes ended the year on a sour note, registering the largest monthly decline since January 2021. Partly, this is because UK consumers did their Christmas shopping early this year. Nevertheless, December’s decrease was much worse than expected and suggests pressure on the UK consumer may be intensifying. Results from retailers themselves over Christmas paint a very mixed picture.”
Jeremy Stern, CEO of PromoVeritas, also provided insights: “Supermarket results have provided a blueprint for success for the sector with Tesco, Sainsbury’s and Marks and Spencer all seeing increases in grocery sales over the festive period. These silver linings of growth are thanks to strategic promotions and loyalty schemes, made more effective in recent years by a better understanding of cash-conscious consumers’ habits.”
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, offered her perspective: “After a slight uptick in November, we’ve seen the biggest fall this year in December, marking a challenging end to the Golden Quarter. Black Friday tempted some consumers to bring forward their spending to November, but ongoing cost-of-living pressures meant most households cut back across all retail categories.”
The December 2023 retail sales figures from the ONS illustrate a retail sector navigating through a variety of challenges. From changing consumer behaviours to economic pressures, the impact on sales figures is significant. The data not only reflects the immediate impact of these factors but also highlights the need for the retail sector to adapt in the upcoming year. As the industry moves forward, understanding consumer habits and strategic promotions remains crucial. The global general elections, and economic volatility stemming from market expectations of rate cuts are setting retailers up for a rocky 2024.
