9th Jan 2020 04:55
(Alliance News) - UK retailers suffered their worst year on record in 2019, data showed on Thursday, though sales in December were boosted, albeit only due to the late timing of the Black Friday promotional period.
In 2019, total sales were down by 0.1%, compared with growth of 1.2% in 2018, numbers from the British Retail Consortium-KPMG sales monitor showed.
It was a year when Brexit uncertainty denting consumer confidence, with some retailers being forced to close shops, cut jobs, and, in the worst cases, resort to company voluntary agreements, an insolvency arrangement.
In the five weeks to December 28, total retail sales were up 1.9% from a year before and increased by 1.7% on a like-for-like basis. In December 2018, total sales were flat annually but declined 1.2% on a like-for-like basis.
Prior to December, only four other months of 2019 saw growth in like-for-like retail sales, highlighting the blight that the sector faced last year. Like-for-like sales climbed 1.8% in January 2019 and by 3.7% in April. They edged 0.1% higher in both July and October.
BRC Chief Executive Helen Dickinson said: "2019 was the worst year on record and the first year to show an overall decline in retail sales. This was also reflected in the CVAs, shop closures and job losses that the industry suffered in 2019. Twice the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election - further weakening demand for the festive period."
The December sales figures were distorted by the late occurrence of the Black Friday weekend, when retailers both on the high street and online offer a flurry of promotional discounts. The sales follow the US's Thanksgiving Day holiday, which in 2019 came later than normal.
Clubbing together November and December, to clean up any distortions from 2019's late Black Friday, total sales lagged by 0.9% year-on-year. On a like-for-like basis, the decline widened to 1.2%.
BRC's Dickinson added: "The industry continues to transform in response to the changing technologies and shopping habits. Black Friday overtook Christmas as the biggest shopping week of the year for non-food items. Retailers also faced challenges as consumers became both more cautious and more conscientious as they went about their Christmas shopping."
Numbers showed that in the three months to December, food sales were flat year-on-year on a like-for-like basis but total food sales climbed 0.7%. The latter figure is still however, below the 12-month average growth of 1.4%.
Susan Barratt, chief executive of grocery market researchers IGD, said: "December's food and grocery sales ended 2019 on a downbeat note. Despite the influence of some inflation across the market, shopper spending was not as expected for such a key sales period. As a result, while the value of spending wasn't down, growth was negligible and volumes declined - a rarity for Christmas in recent times.
"Despite their financial confidence remaining subdued, shoppers appear to be a little bit more optimistic for 2020. Fewer expect food prices to be more expensive, with 75% of shoppers taking this view compared with 78% in November."
Online non-food sales surged by 13% in December, compared to growth of 5.8% in the same period in 2018. Though when considering both November and December together, again to remove any Black Friday distortions, online non-food sales were only up by 2.6%, lagging behind the 12-month average of 3.3% growth.
KPMG Head of Retail Paul Martin said: "Grocery is usually a winner during the festive season, although it is important to highlight that growth has been weakening recently and for many players Christmas did not deliver the results it has in the past.
"All growth will be welcome, although the true performance of Christmas trading is still to be determined. The cost of customer returns must not be overlooked. That's especially true as online fulfilment already costs retailers a pretty penny. Christmas trading reports will likely be mixed, but those that have truly performed well will have managed margin and costs well over both the Christmas period and beyond."
Christmas trading updates have already been given by some UK supermarket chains. J Sainsbury PLC on Wednesday reported a 0.7% sales fall in its third quarter, a period which includes the pivotal Christmas and Black Friday trading periods, though sales in groceries alone edged 0.4% higher.
Wm Morrison Supermarkets PLC on Tuesday said challenging trading conditions and sustained consumer uncertainty led to a 2.9% sales fall in the 22 weeks to January 5.
Kantar data on Tuesday showed UK supermarket sales in the 12 weeks to December 29 rose at their slowest pace since 2015.
By Eric Cunha; [email protected]
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