Retailers are pinning their hopes on one last big weekend of trading ahead of Christmas Day, despite sales growing stronger than expected last month as shoppers snapped up Black Friday bargains and bought early Christmas presents, according to official figures.
Fresh figures from the Office for National Statistics (ONS) suggested retail’s feared bleak midwinter may not be as grim as many fear. ONS data showed retail sales volumes increased by 1.3 per cent in November, higher than many forecast.
Darren Morgan, of the ONS, said: “Retail sales grew strongly in November as heavy Black Friday discounting encouraged shoppers to spend. However, with the three-month trend continuing to fall and overall sales still below pre-pandemic levels, it’s still a challenging time for retailers.
“In the latest month, household goods retailers, clothing shops and department stores all reported robust sales, with computer stores, sports equipment, toy shops and cosmetics stores particularly benefitting from the impact of their Black Friday promotions.”
Sales volumes at non-food stores, which include clothing and department stores, rose by 2.3 per cent last month, up from 0.2 per cent in October.
Retailers said this was supported during the month by earlier Black Friday sales and sharp discounts to price as shops sought to attract more shoppers. Strong demand for furniture in particular resulted in households goods stores benefitting from 3.5 per cent growth.
Food shops saw volumes increase by 0.8 per cent for the month. Supermarkets saw modest growth of 0.1 per cent, with specialist food shops, such as butchers and bakers, reporting a very strong month, with growth of 8.5 per cent, due to earlier Christmas shopping.
The ONS also revised its data for October upwards, reporting that there was zero growth in retail sales after previously estimating a fall of 0.3 per cent.
Despite the unexpected boost, retailers are hoping for a “last minute dash” from consumers. Helen Dickinson, chief executive of the British Retail Consortium, said: “Many retailers tried to give sales a needed boost in November by starting their Black Friday sales even earlier this year. Cosmetics and toiletries had another strong month as consumers continued to splurge on smaller indulgences.
“Retailers anticipate that consumers will be making a last-minute dash to their favourite stores in the final days leading up to Christmas.”
The ONS figures contrasted with the Confederation of British Industry’s (CBI) retail survey which found shops reported a deepening sales downturn as the year drew to a close. Sales volumes fell year on year for the eighth month in a row as “strained household finances and higher interest rates continue to take a toll on consumer spending”.
Martin Sartorius, CBI chief economist, said: “The retail sector ended 2023 on a glum note, with the ongoing downturn in sales volumes deepening during the crucial holiday trading period.
“Stock volumes were judged to be ‘too high’ relative to expected sales in December, while orders placed upon suppliers in the year to December fell at the quickest rate since May 2020.
“Looking ahead, retailers are bracing themselves for a New Year’s chill, as sales are set to fall at an even quicker pace next month. Retailers appear to be gloomy about the sector’s fortunes in the new year, with firms anticipating an even sharper contraction in sales next month. Additionally, they are expecting sales to fall well short of seasonal norms again next month.
“Against the backdrop of a weak sales outlook and elevated stock positions, retailers are set to continue to cut back on orders in January.
A record rise to the National Living Wage in 2024 alongside an increase in business rates will “heap more pressure on the sector in the new year”, he warned.
Victoria Scholar, head of investment at interactive investor said: “The Black Friday, Cyber Monday shopping weekend provided a much-needed boost to the languishing retail sector, particularly household goods retailers, clothes shops and department stores. Supermarkets also benefitted with shoppers stocking up on specialist food and drinks for the festive season.
“Consumers, who are particularly price sensitive amid the cost of living crisis, have been capitalising on these discount opportunities, carrying out their Christmas shopping in November, earlier than normal.
“While there was a notable pick up in spending in November versus October, the broader trend continues to point to a slowdown in retail spending with January likely to be even more difficult for the sector, which is having to rely more and more on discounts and promotions, which eat into margins.”