Commenting on the Office of National Statistics retail sales index for December 2024, Lisa Hooker, Leader of Industry for Consumer Markets at PwC UK:
"Monthly headline reported retail sales fell by 0.3% in December following an already weaker November, which was adjusted downwards by the ONS to account for the later timing of Black Friday. In year-on-year terms, this represented a 2.9% increase in sales volumes excluding petrol compared with December 2023, or 3.5% in value terms including the impact of inflation. These annual growth figures align more closely with reported results from retailers and industry bodies to date."
"Non-food sales across a large number of categories reversed the weaker momentum of Autumn to close up on the previous year. Even fashion recorded a sustained increase in sales volumes, helped by widespread and extended discounting following a challenging year, and also the desire to refresh the wardrobe for festive celebrations last December. Across Christmas, beauty, jewellery and electricals performed better than other categories."
"Overall, grocery sales volumes continued to decline, by 1.2% year-on-year. This contrasts with more positive industry data from the larger supermarkets, suggesting that smaller and specialist stores bore the brunt of this."
"With Storm Darragh bearing down on high street footfall in the critical earlier part of the month, it was no surprise that online retail increased penetration to 27% of total sales, reversing the fall in November. This was also reflected in the stronger performance online reported by larger retailers including Next and Marks & Spencer."
"As PwC predicted, consumer spending on Christmas grew, as consumers again sought to make the festive period special for their immediate family and friends. But it is clear that retail was not the primary beneficiary of that increase, with more disposable income being diverted to leisure, hospitality and travel, which have all reported far better results over the period. Also more returned to holidaying over the festive period."
"While the headline retail sales figures will add to the disappointment following lacklustre wider GDP growth reported earlier in the week, there are some positive signs of consumer spending momentum, particularly in the leisure sector. This reflects the higher disposable income of typical households following wage increases, lower inflation and lower national insurance contributions experienced in 2024. The challenge for the retail sector will be to persuade shoppers to spend that additional disposable income here as opposed to in other categories, particularly as consumer confidence has failed to improve since stalling in Autumn prior to the Budget."
"More widely, as indicated by several trading updates already this month, 2025 is likely to see a return to higher price inflation as retailers pass on the increasing cost of doing business, in particular due to the National Living Wage and employer National Insurance contributions from April."
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 149 countries with more than 370,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
© 2024 PwC. All rights reserved.
