Two sets of figures published in the UK this week point to faster growth in spending on clothing than on many other items in December, especially online.
Data from the British Retail Consortium (BRC) and KPMG shows UK retail sales increased by 0.6% on a like-for-like basis in December, compared with the same month the previous year when they increased 1.0%.
Total sales rose 1.4% in December, against a growth of 1.7% in December 2016, largely due to above-average spending on food.
Indeed, over the three months to December 2017, non-food retail sales in the UK decreased 1.9% on a like-for-like basis and 1.4% on a total basis – the lowest since March 2009.
However, perhaps fuelled by December’s cold weather, clothing was second in the total sales rankings for the month.
And further reinforcing the disparity between the high street and online, online sales rose 7.6%, with health and beauty, shoes and clothes proving particularly popular.
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By GlobalData“The divergence between growth in sales of food and non-food has never been so stark,” said Helen Dickinson OBE, BRC chief executive.
“With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts.
“That made this year’s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales. These promotions came as a welcome relief for stretched households, although the late lift in sales came at the expense of margins for many retailers.
“Retailers who did well in such a challenging environment got both their discounting strategy and omni-channel offerings right. Those who could offer and deliver on last minute delivery options did better, boosting online non-food sales more than 15% in the seven days before Christmas, a week when, until now, shoppers would have had to turn to stores to ensure gifts made it under the tree in time.
“With spending likely to remain under severe pressure in the next few years, it’s imperative that in the forthcoming trade negotiations, the Government does all it can to avoid adding new tariffs to existing price pressures.”
Barclaycard boost
Separate consumer spending data from Barclaycard, which processes nearly half of Britain’s credit and debit card transactions, shows consumer spending grew 4.0% in December – above the Q4 average of 3.2% and the prevailing rate of inflation, as consumers increased expenditure across the board.
Its data shows spending on clothing saw healthy gains of 4.1%, with consumers taking advantage of cut-price deals as part of month-long discounting events such as Black Friday.
The sales period also proved a hit for online, where spending was up 14.1% in December.
But while shoppers loosened the purse strings to enjoy Christmas and take advantage of seasonal sales, they remain cautious about prospects for the year ahead, Barclaycard says.
More than four in 10 (42%) believe the economy will deteriorate to some extent during 2018, with almost half (46%) worrying about the impact of a further rise in interest rates on their perceived spending power.
