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No Christmas miracle for UK retail as sector flatlines in December.

Posted by Yomdelier - 11 January, 2019

While December saw a positive uplift in the housing market, the same can’t be said for the UK retail sector.

The latest figures from the British Retail Consortium show the retail sector flatlined over Christmas at 0% annually, with a -0.7% drop in like for like sales, the worst festive season for UK retail in a decade.

Despite many bricks and mortar retailers deploying heavy discounting tactics, these lower prices weren’t enough to tempt shoppers out onto the high street to do their Christmas shopping.

While online retail also saw an unseasonal decline, the sector continued to grow in popularity with the contrast in performance remaining evident according to Paul Martin, UK head of retail at KPMG.

Not only are high street retailers struggling to survive against the growing preference of online shopping, but an increase in business rates and staff costs is causing problems at the other end and many are struggling to balance the two while remaining profitable.

But it isn’t just the independent outlets that are feeling the pinch. Debenhams reported a 5.7% fall in like-for-like sales while Marks and Spencer also saw a 2.2% reduction in Christmas sales. While John Lewis remains a cut above the rest due to the popularity of its now consistent Christmas advertising campaigns, it has admitted it may not be able to secure the staff bonus for its employees this year. Halifax has also issued a profit warning and expects this to continue into 2019.

However, there is some good news. Tesco bucked the trend with a “strong” Christmas period with sales up 2.2%, outperforming in all key categories.

Founder and CEO of Yomdel, Andy Soloman, commented:

“While many bricks and mortar retailers would have been hoping for a Christmas miracle and an uplift in consumer spend over December to help them through the tough, initial quarter of 2019, this has failed to materialise and will leave many in a financially precarious position.

Of course, Brexit is curbing consumer appetite to an extent, but a far greater hurdle for the Great British high street is how to remain competitive against the value of online retail while being squeezed from the other end via a hike in business rates and an ever-increasing wage bill.

Now, more than ever, the retail sector needs to evaluate its consumer offering and how they integrate this with the changing face of the industry in order to create greater appeal, while streamlining operations and lowering overheads through the implementation of technology.

Those that manage to do so will evolve and survive but unfortunately, 2019 is likely to bring further casualties as our big high street names continue to struggle."

Topics: retail