Worst Christmas for retailers in a decade

The British Retail Consortium (BRC) has revealed that Christmas 2018 was the worst for retailers in a decade, with sales showing no year-on-year growth. Like-for-like sales for the period were down by 0.7 per cent.

Helen Dickinson OBE, Chief Executive, BRC, commented: “Squeezed consumers chose not to splash out this Christmas with retail sales growth stalling for the first time in 28 months. The worst December sales performance in 10 years means a challenging start to 2019 for retailers, with Business Rates set to rise once again this year, and the threat of a No-Deal Brexit looming ever larger.

“The retail landscape is changing dramatically in the UK, while the trading environment remains tough. Retailers are facing up this challenge but are having to wrestle with mounting costs from a succession of government policies – from the Apprenticeship Levy, to higher wage costs, to rising business rates.

“Retail makes up five per cent of the economy, yet pays 10 per cent of all business taxes and 25 per cent of all business rates. This is neither fair nor sustainable. The Government should urgently look into reforming the broken business rates system and champion the future of retail in the UK.”

Paul Martin, UK Head of Retail at KPMG, added: “Retailers experienced little festive cheer this year, with total sales in December delivering zero growth on last year. This comes despite some retailers desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers.

“The continued contrast in performance between the high street and online remained evident in December – albeit 2018 did also see a continued slowdown in online retail sales.

“The first months of 2019 will unlikely hold much improvement. As many retailers report their festive trading performance, the list of winners and losers will become clear, but winning means more than just improving sales. Retailers have to protect their margins in order to deliver a profitable festive season.”

In addition, Jat Sahi, Digital Lead Retail at Fujitsu UK, said in relation to the report: “A tough Christmas period caps off a rocky year for retailers, which has seen them challenged by both teetering consumer confidence and structural changes in the industry.

“On an operational level, there are several new technologies coming to the fore that could offer opportunities. Whether it’s using AI to forecast demand in a more sophisticated way, deploying Internet of Things technology in the supply chain to boost efficiency, or automating the more rote parts of customer service, retailers need to make smart investments that are geared to the long-term. Moreover, in order to make the most of the move to online, retailers need to ensure that their online, in-store, and mobile offerings are joined-up.

“With stalwarts such as John Lewis struggling to deal with a tough period, it’s clear that retailers are facing a challenging environment, where they can no longer depend on holiday bonanzas to put them in the black. They need to focus on the long-term, making clever investments to create efficiencies and create the shopping experience of the digital age.”