Retail gloom as festive season fails to save 2024 trading
High street stores showed anaemic growth in the 2024 festive season, despite hopes that Christmas trading would inject some cheer into the sector.
Sales grew just 0.3 per cent overall in the ‘golden quarter’, which includes Black Friday, Cyber Monday and Christmas, according to the British Retail Consortium (BRC).
Online sales continued to beat in-store, with brick-and-mortar sales up just 0.4 per cent year-on-year in December, versus an 11.1 per cent rise online.
“Following a challenging year marked by weak consumer confidence and difficult economic conditions, the crucial ‘golden quarter’ failed to give 2024 the send-off retailers were hoping for,” Helen Dickinson, chief executive at the BRC, said.
Data from accountancy and business advisory firm BDO suggested a more positive overall picture than the BRC, with total sales up two per cent versus BRC’s 0.3 per cent.
But it said high street sales growth was flat at just 0.1 per cent in the final three months of 2024.
“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,” Sophie Michael, head of retail and wholesale at BDO said.
“After a challenging year, this low level of growth is a real concern for the retail sector,” she said.
UK head of consumer goods at KPMG, Linda Ellett, added: “[Low sales growth] reflects the ongoing careful management of many household budgets during a time when many costs remain at a heightened level compared to past years.”
Over 200,000 jobs to disappear in 2025
The BRC has predicted sales growth will average 1.2 per cent in 2025, although this is below the projected shop price inflation of 1.8 per cent.
The body has estimated that the regulatory and tax burden on retailers will increase costs by £7bn in 2025 due to rising National Insurance Contributions, an increase in the national living wage and new packaging levies.
“With little hope of covering these costs through higher sales, retailers will likely push up prices and cut investment in stores and jobs, harming our high streets and the communities that rely on them,” Dickinson said.
Over 200,000 retail jobs are set to disappear next year, along with over 17,000 stores, in part due to higher taxes, according to the Centre for Retail Research (CRR).
“The government must find ways to mitigate this, so that retailers can invest more in growth and jobs, starting with its planned business rates reform where it must ensure that no shop ends up paying higher rates than they do already,” Dickinson added.
Michael said: “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.”