Retail sales across discretionary categories like fashion and homewares fell -2.7% compared to last year. The fashion sector performed particularly poorly, with sales falling -6.1%.
This is the worst December performance since BDO’s records began, with all three months of the so-called ‘Golden Quarter’ recording negative sales growth.
Sophie Michael, head of retail at BDO, says that there is a real risk that 2024 will see more store closures and more retailers struggling as consumers flock to those that can offer a better in store or online experience, as well as competitive pricing.
The retail sector recorded its worst December performance since at least 2017, ending the year with negative like for like sales figures in all three months of the crucial ‘Golden Quarter’, according to new data from accountancy and business advisory firm BDO.
BDO’s High Street Sales Tracker, recorded a fall of -2.7% for total like-for-like (LFL) sales for discretionary spend in December compared to last year’s figures.
Michael said, “This is the worst December performance we’ve seen since our records began, with 2023 only the third year on record with negative in-store sales in each of the three months leading up to Christmas, which last happened in 2015.
“Taking into account inflation which still remains high, the seriousness of these results should not be underestimated.”
The month started negatively, with sales falling by -3.49% in week one, and then worsened, with sales in discretionary categories falling -6.25% in week two and -4.49% in week three. Despite an uptick in the week leading up to Christmas Eve, sales fell again in the final week of December, by -3.58% compared to the same period last year.
The fashion sector performed particularly poorly in the run-up to Christmas, with sales falling by -6.1% compared to 2022, and in-store sales plummeting -7.5%. Sales in the lifestyle and homewares sectors fell less sharply, but still declined -0.2% and -1.6% respectively.
Michael added, “This concerning set of results means that retailers have failed to generate the much needed revenues in the critical period, leaving them with relatively high seasonal stock levels as they enter the new year. This will no doubt have an impact on their already squeezed margins and their ability to generate cash for future investment.”
“In contrast, it’s been widely reported that supermarkets have performed well over Christmas. Consumers have clearly chosen to channel their discretionary spend on products 03for the ‘Christmas table’ to celebrate the festive season, rather than on new outfits or gifts. This will be of significant concern to those retailers heavily relying on discretionary spend.
“Higher sales in the so-called ‘Golden Quarter’ are expected in order to bolster profits and give retailers the capital they need to invest. While some may still be able to make those investments, those that don’t risk falling behind and struggling to attract customers.
“There is a real risk that 2024 will see more store closures and more retailers struggling as consumers flock to those that can offer a better in store or online experience, product range or more competitive pricing.”
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