In a disappointing end to the year, UK retailers faced a “drab Christmas” as overall retail sales grew by just 1.2% in December compared to the previous year, well below the 12-month average of 2.3%. The data, released by the British Retail Consortium (BRC), underscores the challenges facing the country’s high streets.
While food sales remained resilient, shoppers were more cautious when it came to non-food purchases, such as clothing and computers, with sales slipping 0.3% compared to growth of 4.4% in December 2024. This trend was exacerbated by mild, wet weather and heavy discounting, which led many consumers to hold off on their spending until the post-Christmas sales.
The gloomy figures were further reflected in card spending, which dropped by 1.7% in December compared to the same period a year earlier, marking the greatest year-on-year decline since February 2021.
However, the news was not entirely bleak, as discount supermarkets Aldi and Lidl reported record Christmas trading. Aldi’s UK arm saw a 3% year-on-year sales increase in the four weeks to 24 December, while Lidl’s sales rose 10% in the four weeks to Christmas Eve.
The larger supermarket chains, Tesco and Sainsbury’s, also reported sales growth over the Christmas period, but their share prices fell sharply last week as investors had expected stronger results.
The industry’s woes extend beyond the festive period, with rising prices and low consumer confidence posing significant challenges. Inflation in the grocery sector hit 4.3% in December, according to data from Worldpanel by Numerator, leading 64% of shoppers to intend to cut their spending on groceries this year. More than half also plan to reduce their discretionary spending, with new clothes and restaurant meals on the chopping block.
The pressure on traditional retailers is further exacerbated by the rise of online competition, particularly from cut-price platforms like Temu and Shein. As a result, three retailers – the jewellery brand Claire’s, the cut-price homeware chain the Original Factory Shop, and the clothing chain LK Bennett – are poised to call in administrators.
Helen Dickinson, the BRC chief executive, summed up the industry’s struggles, stating that it was a “drab Christmas” as sales growth slowed for the fourth month in a row. The data underscores the ongoing challenges facing the UK’s retail sector, which must adapt to changing consumer preferences and the ever-evolving competitive landscape.