Crucial ‘golden quarter’ fails to save 2024 for retailers

The crucial “golden quarter” failed to give retailers the send-off to 2024 they were hoping for after a year marked by weak consumer confidence, figures show.

Sales were just 0.4% higher over the three months to December than in the same period in 2023, reflecting households’ cautious spending in response to stretched budgets, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.

December, coupled with the Black Friday week at the end of November, delivered a 3.2% year-on-year sales increase, with the likes of AI-enabled technology and beauty advent calendars boosting festive takings.

Food sales in December were up 1.7% year on year, a weak showing in light of the previous December’s 6.3% growth and below the 12-month average growth of 3.3%.

For the year overall, total UK retail sales increased by 0.7% on 2023.

A 3.3% increase in food sales over the year disguised a dire year for non-food sales, down 1.5% on the year before.

BRC chief executive Helen Dickinson said: “Following a challenging year marked by weak consumer confidence and difficult economic conditions, the crucial ‘golden quarter’ failed to give 2024 the send-off retailers were hoping for.

“While we project sales growth to average 1.2% in 2025, this is below the projected shop price inflation of 1.8%. This means volumes are likely to fall this year, all while the regulatory and tax burden on retailers will increase costs by £7 billion from rising national insurance contributions, increasing national living wage, confirmed in the Budget, and new packaging levies.

“With little hope of covering these costs through higher sales, retailers will likely push up prices and cut investment in stores and jobs, harming our high streets and the communities that rely on them.”

Linda Ellett, UK head of consumer, retail and leisure markets at KPMG, said: “With Black Friday falling as late as it did, this year it was part of the Christmas shopping season even more so than in previous years.

“However, sales growth during the golden quarter of October to December was minimal, reflecting the ongoing careful management of many household budgets during a time when many costs remain at a heightened level compared to past years.”

Sarah Bradbury, chief executive of analysts IGD, said: “Early results for Christmas trading show some positive signs, with both grocery sales and volumes up compared to last December, although the rate of growth has slowed compared to 2023.

“As is often the case, some shoppers opted to treat themselves by trading up with some product choices this Christmas. However, with the economic outlook for 2025 remaining relatively weak, and with households facing the prospect of rising bills, this shopper behaviour could be short-lived.”

Separate figures from Barclays show card spending remained flat year on year in December, while essential spending fell 3% due to lower fuel prices and consumers making cutbacks in response to inflation concerns.

A survey for the bank found 86% of adults are concerned about rising food prices and 87% about household bills.

However spending on entertainment continued its strong run, up 6%, with pantomimes, ballets and box office phenomenon Wicked driving sales.

Restaurants fared less well, with 49% of consumers saying they plan to cut back on eating out and spending up just 1.1% in December.

Karen Johnson, head of retail at Barclays, said: “Consumers demonstrated their ability to carefully manage their money once again in December, finding ways to save while still sprinkling in some cheer, setting aside funds to treats themselves and loved ones over the festive period.”