Consumers ‘holding back’ on Xmas shopping

Many households “held back” on Christmas spending in the four weeks to 25 November with total retail sales below three per cent, according to new research.

The British Retail Consortium (BRC) found that total retail sales increased by 2.7 per cent in November, compared with a 4.2 per cent rise in November 2022.

The total exceeded the three-month average growth of 2.6 per cent but was below the 12-month average growth of 4.1 per cent.

While in growth year on year, the association found that total food sales at 7.6 per cent growth in the three months to November also fell below the 12-month average growth of 8.4 per cent.

“Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November,” said BRC chief executive Helen Dickinson. “While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending.”

Paul Martin, UK head of retail at KPMG added that with two of the three months of the ‘golden quarter’, considered by many as the most important time of the year for retailers, sales growth below three per cent meant it had already been a weak Christmas trading period.

“Price remains the main purchasing driver, so we are likely to see a prolonged and well targeted period of discounting as retailers compete hard for a shrinking pool of spend and will need to clear stock,” he said.

GlobalData previously forecast that UK retail spend would see a 3.4 per cent increase in the run up to Christmas, taking retail spend to around £110 billion in the fourth quarter of 2023.

The analytics company also noted that the anticipated rise – which could now fall short of this estimate – would still be lower than same quarter of last year’s increase of 6.2 per cent, marking a second quarter of slowing growth in 2023.

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