Retail Sales Monitor
Festive Cheer to Round Off a Strong Year
Helen Dickinson OBE, Chief Executive, BRC:
Despite the recent Omicron outbreak, retail sales held up through December. Many people chose to shop online rather than travel to nearby high streets and shopping centres. Loungewear was back in fashion, as many pre-empted the possibility of future restrictions. Meanwhile, the return of work-from-home advice and reduction in Christmas social events, caused formalwear sales to slow. In the face of rising case numbers and supply chain issues, people in retail pulled out all the stops to ensure everyone got what they wanted this Christmas.
Retailers did well to weather the challenging trade conditions, with retail sales for 2021 up on both the previous year and compared to pre-pandemic levels. Continuing a trend throughout the pandemic towards online shopping, 2021 saw a double digit rise in non-food online sales, a testament to retailers’ huge investments in their online platforms. However, retail faces significant head winds in 2022, as consumer spending is held back by rising inflation, increasing energy bills, and April's National Insurance hike. It will take continued agility and resilience if they are to battle the storm ahead, while also tackling issues from labour shortages to rising transport and logistics costs.
Paul Martin, UK Head of Retail, KPMG:
Following a strong November, retail sales continued to grow in December increasing by just over 2% compared to 2020, although the spread of the Omicron variant and updated Government guidelines slowed spending during the final weeks of the year.
Apparel and jewellery continued to dominate Christmas gift buying at the tills, whilst spending on food and drink was solid, although it slowed to just over 1%.
Consumers continued to head to the high street for their festive gifts, determined to secure the presents they wanted and not leaving online deliveries arriving on time to chance. Footwear was the only online category to see mild growth as overall online sales continued to decline, falling by over 8% in December albeit against strong comparators in 2020.
As we head into 2022, retailers will be keeping close to Government COVID-19 updates and hoping consumer confidence holds up in order to offset the rising cost challenges they are likely to experience for the foreseeable future. Retailers have worked hard to manage factors in their control throughout the pandemic to adapt to the changing environment, but there are many macro factors outside of their control that could impact them this year. With many retailers cautiously optimistic for 2022, focussing on continuously re-engineering their business models, ensuring they operate resilient supply chains and have a tight grip on their costs will be the top priorities.
Food & Drink sector performance, Susan Barratt, CEO, IGD:
Food and drinks sales delivered a strong performance in December 2021 and were back in year-on-year growth. This is particularly impressive considering the exceptionally strong sales recorded in December 2020 and indicates that many shoppers took advantage of being able to celebrate Christmas this year with family and friends.
However, IGD’s Shopper Confidence Index shows that December was a month of two halves. Overall confidence remained unchanged from November; but the index declined at the start of the month as further restrictions were announced to curb the rise of Omicron. However, as most people were able to celebrate with family and friends once again, shopper confidence increased significantly around the festive break. Looking ahead and amid inflation reaching a 10-year high in December, the rising cost of living looks set to shape shopper sentiment in 2022 and our ShopperVista data shows that 86% of shoppers expect food to get more expensive in the year ahead, the highest level since January 2016.
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