Festive sales underwhelm as shoppers wait for January deals - BRC

(Sharecast News) - Retail sales underwhelmed in December, industry figures showed on Tuesday, as consumers refrained from splashing out until the January sales. According the latest BRC-KPMG retail sales monitor, food sales increased by 3.1% in the five weeks between 30 November and 3 January. That compared to growth of 1.7% in December 2024. However, non-food sales - which rose 4.4% a year previously - fell 0.3%.

As a result, UK total retail sales increased by just 1.2% year-on-year last month, compared to growth of 3.2% in December 2024. The uplift was also below the 12-month average growth of 2.3%, and lower than November's 1.4% increase.

It was, however, better than expected, with consensus for a more modest 0.6% rise.

The retail sales monitor echoed festive trading updates from individual supermarkets, which largely showed strong demand for festive food and drink tempered by more modest sales across general merchandising.

Helen Dickinson, chief executive of the British Retail Consortium, called it a "drab Christmas" for retailers.

She continued: "While food sales rose on the back of ongoing food inflation, non-food sales fell flat in the run up to Christmas, with gifting items doing worse-than-expected.

"Many people were clearly holding out for discounts, with the last week showing significant growth off the back of Boxing Day and beginning of the January sales."

Sarah Bradbury, chief executive of retail consultancy IGD, said: "December saw record Christmas grocery sales and a welcome boost in shopper confidence, as often happens during the festive season.

"However, minimum volume growth highlights that the food and drink industry is still under pressure; nearly half of shoppers told us they were more worried about the cost of Christmas this year."

Food price inflation has fallen back from recent highs. Data published by Worldpanel by Numerator last week showed inflation easing to 4.3% in December from 4.7% a month previously.

However, it remains high by historic standards, while consumer sentiment remains weak, undermined by ongoing economic uncertainty and heightened geopolitical risk.

Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: "It remains a challenging time for retailers, with consumers cutting back on spending due to higher household bills.

"Any discretionary spend is being prioritised, particularly toward holidays and home improvements."