Retailers benefitted from a last minute Christmas rush to boost sales, leading to a 1% increase from December 2015, according to a new British Retail Consortium (BRC) report.
Sales in the final week leading up to Christmas were up 40% in comparison to other weeks in the month.
Paul Martin, UK Head of Retail for KPMG, said: “Retailers were helped by the timing of Christmas, which fell on a Sunday, giving shoppers the chance to use the weekend for a final dash to the shops delivering a last-minute boost to sales.
“Festive feasts were clearly at the forefront of shoppers’ minds, with the three-month average of like-for-like food sales jumping up by 1.1%. A mean feat considering the stagnation noted the previous month.”
Over the three months to December, food sales increased 1.1% on a like-for-like basis and 2.4% on a total basis. This is the highest three-month average total growth since September 2013.
Non-food retail sales also saw an increase of 1.1% on a like-for-like basis and 1.3% on a total basis.
Online sale saw the highest growth of 7.2%, whilst in-store sales actually declined 1.2% on a total basis and 1.4% on a like-for-like basis.
Trend reflected locally too
Lincolnshire retail expert Clare Bailey, Director and co-founder of Mobaro Retail UK, said: “The national figures are likely to be reflected at the local level, although there will be some minor regional variations.
“Although food sales were particularly strong, what we don’t currently have is any information to add context to understand what has caused the increase in 2016 vs 2015.
“We need to understand why consumers changed their spending habits – are people eating more? Are they spending on more luxury food items? Has spending been diverted from other activities?
“One factor might be that people who historically would have spent more on eating out were choosing to stay at home and eat in, to save money.
“Underlying reasons for such changes could be attributed to uncertainty regarding the economy and the political instability brought about by Brexit, for instance.
“The figures also show growth in online sales with a small decline in store sales. However, that has been a trend for some time.
“What we must not read into this is that stores are ‘doomed’! Whilst the point of transaction might be online, an increasingly popular fulfilment option is ‘click and collect’ – where online orders are collected at the store.
“This trend allows customers to collect their goods at their convenience, and in many cases also often means that customers spend a little more, on impulse, in store, at the time of collection.
“In light of this continuing trend, my advice to any retail business or any size is to ensure that they have a solid transactional website and can offer customers click-and-collect as a matter of standard. That’s what customer expect these days.
“Finally, and considering some of the results and commentary from the likes of Next, the real impact of Brexit is only likely to begin to become apparent in 2017.
“Larger retailers will start to feel the impact of the weaker pound on their purchases, resulting in higher cost-prices for goods. Whether the increased cost is mirrored in increased retail prices (pushing up inflation) or whether those costs are absorbed in product margins (reducing retailers profitability) remains to be seen.
“Certainly I can echo the commentary on the BRC-KPMG figures, in that it is unlikely retailers will enjoy such a buoyant Christmas again for some time and 2017 will be a very interesting, if uncertain, time for retail.”