Retailers were hoping that the combination of an improving economy and more optimistic consumer outlook would cause Christmas sales to skyrocket, but unfortunately this proved not to be the case. In fact, the high street endured its worst Christmas sales period since the start of the financial crisis, with data from the BRC/KPMG Retail Sales Monitor showing the strong impact heavy discounting took upon retailers in December.
According to the report, like for like sales fell by 0.4 per cent during the month, with industry experts blaming the fallout from Black Friday for the plunge in both in-store and online sales.
They believe that a spike in demand around November the 28th caused disruption in online deliveries for many retailers, causing many consumers to hold off on purchases as they feared their orders would not arrive in time for Christmas – as a result, online sales rose by only 7 per cent, less than half of the 19.2 per cent growth recorded during Christmas 2013.
Head of retail at KPMG, David McCorquodale, believes that the new trend for pre-Christmas sales played a huge role in the disappointing results posted by many UK retailers.
He says; “Extensive discounting disrupted the timing and rhythm of Christmas spending.
“Between Black Friday and Boxing Day retailers and consumers engaged in a three week dance, each waiting for the other to take the lead and as a result sales suffered.
“It’s now clear that Black Friday did pull festive sales forward into November, and this created a challenging lull in spending with consumers waiting for future bargains – this situation did not reverse until the week of Christmas.”
Fashion retailers, most prominently Marks & Spencer, suffered greatly due to the discounting period, especially as the warm autumn forced many to engage in heavy price cuts as a means of shifting stock for the arrival of the post-Christmas spring lines. However, when changes in price are ignored and actual sales volume is measured, overall sales grew by 2.6 per cent, drawing equal with results in December 2013.
In terms of the grocery market, the big four continued to struggle against the popularity of discounters including Aldi and Lidl. Yet BRC director general Helen Dickinson points out that food sales rose for the first time since Easter.
Not all retailers suffered during December, though, as once again home ware and electronics specialists were able to capitalise upon the growing confidence amongst consumers. IKEA, in particular, enjoyed a very profitable Christmas trading period, with the last four months seeing sales growth of 11.1 per cent and post-Christmas sales reaching record levels.
UK and Ireland country manager for IKEA, Gillian Drakeford, says; “We’ve seen the main areas of growth in bedrooms, bathrooms and kitchens where we have made recent investments to improve the shopping experience for our customers.
“Growth has also followed the investment of over £27 million to lower the prices of our products throughout our range.
“We believe in making it easier for our customers to shop with us and are thrilled that these investments have resulted in further growth this year.”
Do you think these results will have any impact on activity in the retail property market during 2015?
Previous Post
M&G Real Estate adds 3 Hardman Square to Portfolio
