Retail sector ‘yet to feel the impact’ of the Chancellor’s Budget – London Business News | Londonlovesbusiness.com

Total retail sales in discretionary spend categories grew by +7.7% in December but failed to boost overall growth in the Golden Quarter, according to BDO’s latest High Street Sales Tracker.

Accountancy and business advisory firm BDO’s latest report shows that while Black Friday, Cyber Monday and Christmas Eve drove sales growth both online and in-store in December, like-for-like sales figures for the final three months of 2024 – the critical ‘Golden Quarter’ – saw overall growth of just +2.0%, compared to a base of -1.6% in 2023.

Bricks-and-mortar shops fared particularly poorly in this period, with sales remaining flat at +0.1% compared to 2023’s base of -0.2%.

Outside of the first and last weeks of December, which saw the major sales events, high street sales performed very poorly, with sales declining -3.91% compared to a weak base in 2023 of -3.61%. Bad weather and widespread flooding may have driven consumers to shop online, where sales increased by +20.7%.

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Sophie Michael, Head of Retail and Wholesale at BDO, said, “While December’s overall sales figures saw a slight uptick thanks to major sales events, this is a continuation of the poor performance we’ve seen throughout the so-called ‘Golden Quarter’.

“After a challenging year, this low level of growth is a real concern for the retail sector. The struggling performance of high street stores is particularly notable, with essentially flat growth against last year’s very poor baseline, meaning that volumes were once again negative.

“While there was optimism as we entered 2024, the reality proved to be a difficult trading year for the retail sector, with economic uncertainty and supply chain disruptions. The biggest concern however is that 2025 is not expected to improve as businesses are yet to feel the impact of increased wage costs introduced in the Budget which disproportionately impacts consumer-facing sectors.

“Recent reports note that 170,000 shop workers lost their jobs in 2024, with an expectation that this number will only increase in 2025. January will be telling once retailers see the level of returns from unwanted Christmas presents; the industry would be forgiven for lacking much New Year optimism.

“The sales figures we’ve seen through the Golden Quarter reflect consumer sentiment over the last few months. Consumer spending declined significantly before and after the Budget, and despite a late flurry of spending just before Christmas, that hasn’t been enough to salvage the festive period for retailers. While the industry will be hoping that consumer confidence returns in 2025, there are few signs of this materialising, given the additional cost impacts of the Budget are set to take effect from April.”