Retail sales 'muted' in December as non-food slumps

Like-for-likes across the industry climbed 0.6% during the five weeks to December 30, according to the latest BRC-KPMG Retail Sales Monitor.

Total sales increased 1.4% in the same month.

Despite the uplift during December, non-food trading was “muted” on the high street across the wider three-month period running up to Christmas.

In-store non-food sales tumbled 3.7% in total terms and 4.4% on a like-for-like basis – the worst slump since the BRC-KPMG monitor began six years ago.

Despite growth from ecommerce – online non-food sales jumped 7.6% in December – overall non-food sales fell 1.9% on a like-for-like basis, while total sales slipped 1.4%.

That represented the sector’s worst performance since March 2009.

In contrast, like-for-like food sales advanced 2.6% during the three-month period and rose 4.2% in total terms – the highest increase since last June.

‘Light and dark’

The industry barometer was revealed in the wake of two post-Christmas profit warnings.

Debenhams sharply downgraded its full-year forecast last Thursday after UK like-for-likes slumped 2.6% in the 17 weeks to December 30.

And yesterday Mothercare issued a profit warning of its own after like-for-likes nosedived 7.2% in the 12 weeks to December 30.

Their downbeat forecasts came after high street bellwether Next kicked off the hectic retail reporting schedule with a better-than-expected 1.5% uplift in full-price sales.

British Retail Consortium chief executive Helen Dickinson said there was “both light and dark” during the crucial Christmas trading period, and claimed that “the divergence between growth in sales of food and non-food has never been so stark”.

Golden quarter takeaways

Dickinson added: “With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts.

“That made this year’s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales.”

Dickinson said the retailers who “did well” during the golden quarter were those who “got both their discounting strategy and omnichannel offerings right”, as well as those who offered last-minute delivery options.

KPMG head of retail Paul Martin described the uplift in sales as “meagre”, adding: “Grocers benefitted from festive feasts, but growth elsewhere on the high street was otherwise rather muted for the time of year.

He added: “In a market that will at best see stagnant growth in 2018, gaining market share will be a primary focus. That will entail understanding your customers fully – including where, when and how they want to shop.”