Retailers suffered a “lacklustre” January as unhealthy climate and price of residing pressures discouraged consumers from opening their wallets after Christmas, in response to new analysis.
Total retail gross sales throughout the UK elevated by just one.2% year-on-year in January – down sharply from development of 4.2% throughout the identical interval final yr, figures from the British Retail Consortium (BRC) and KPMG mentioned.
Separate figures from Barclaycard additionally discovered year-on-year shopper card spending grew by simply 3.1% over the identical month.
It blamed the latest chilly climate – together with from Storm Isha and Storm Jocelyn – for pushing aside consumers from visiting excessive streets, and claimed Britons have been as a substitute “embracing nights in” by watching TV hits corresponding to The Traitors.
The BRC mentioned January gross sales discounting helped increase spending within the first two weeks of the post-Christmas interval, however added the pattern was “not sustain[ed] throughout the month”.
Chief government Helen Dickinson mentioned: “Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year.”
Clothing and footwear gross sales additionally carried out poorly, though there was an upward pattern for well being and sweetness merchandise, she added.
Linda Ellett, KPMG’s UK head of shopper markets, leisure and retail, described the excessive avenue’s efficiency as “lacklustre” and mentioned the “feel-good factor” from falling mortgage charges and easing inflation had but to materialise on the tills.
She mentioned: “It could also be a brand new yr, however the hangover of low shopper confidence stays.
“The extraordinary weather conditions across large parts of the country did little to encourage shoppers out on to the high street, whilst continued industrial action on the rail network was unhelpful for city centre locations.”
It comes after official figures confirmed a shock fall in retail gross sales throughout the important thing December purchasing interval, regardless of some optimistic studies by main excessive avenue outfits within the run-up to Christmas.
Shelter from the storms
Barclaycard mentioned its below-inflation development figures prompt “Brits stayed at home to shelter from the cold weather and save money after a busy festive period”.
It mentioned spending on takeaways and quick meals was up 5.5% year-on-year in January, with folks spending £55 every on common, whereas family bills on digital content material and subscriptions elevated by 11.4%.
Nearly half of two,000 shoppers polled on behalf of Barclaycard mentioned they have been utilizing loyalty schemes or vouchers to get cash off purchasing, whereas 43% mentioned they plan to chop down on non-essential spending on account of rising payments.
But the ballot additionally discovered 70% believe of their family funds – the best degree in its month-to-month survey since November 2021.
Karen Johnson, head of retail at Barclays, mentioned: “Brits took on a more frugal approach in January, choosing to stay at home more often to save money and shelter from the winter weather.
“This meant that on-line retail carried out strongly, as consumers browsed the gross sales from the consolation of their sofas, whereas demand for digital content material and takeaways remained strong, boosted by the discharge of common new movie and TV releases corresponding to The Traitors and Fool Me Once.
“While this shift in behaviour resulted in subdued growth for hospitality and leisure, it’s encouraging that confidence is improving, with consumers remaining resilient and finding savvy ways to manage their finances.”
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Jack Meaning, chief UK economist at Barclays, added: “Increasing consumer confidence is a positive message for the UK outlook in 2024, as we see inflation continue to fall, real incomes rising and growing signs that interest rate cuts are coming.
“Spending seems to be to be on an upward trajectory”.
The figures got here because the BRC’s Ms Dickinson mentioned she hoped the “next government” may enhance the outlook for companies.
Opinion polls counsel the Labour Party is on track to win the following common election, which many commentators count on might be held this autumn.
Ms Dickinson mentioned: “With the spring budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers.
“Employing three million folks and supporting households and communities in each nook of the nation, retail is the ‘in every single place financial system’.
“By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”