Blue Christmas for retailers as December sales tumble

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The latest official estimates reveal retail sales plummeted by -3.2% in December, their biggest fall since the height of Covid lockdowns. The impact of inflation meant shoppers reduced the amount they bought this Christmas, but there were crumbs of comfort in online sales results.

The latest Office for National Statistics (ONS) retail sales figures for December show that Christmas sales fell away sharply after Black Friday. Retail sales volumes (the amount of goods we bought) are estimated to have fallen by -3.2% and the amount we spent plummeted by -3.6%, compared to November.

These figures are grim, but not surprising. Department stores’ sales volumes – always a good barometer of how successful Christmas was – fell by a disastrous -7.1% in December against the previous month. Brits actually spent 0.6% more than they did in December 2022, but that was due to inflation. The quantity of items purchased, including gifts and food, was down -2.4% on last year.

To top this depressing picture, the -3.2% fall in sales volumes was the largest monthly fall since January 2021, when tighter Covid restrictions wiped out High Street sales.

Nor did shoppers splash the cash on new outfits for Christmas parties this year. Clothing stores’ sales volumes fell by -1.5% over the month. That’s very disappointing.

After a lacklustre November for online sellers, they would have hoped to see an increase in sales during December. However, that largely failed to materialise. Sales volumes for non-store retailing (predominantly online retailers) fell by -2.1% in December, following a fall of -1.1% in November. That’s a concerning result, but one ParcelHero warned about at the beginning of this month, following a fall in the number of returns in the first week of January. The higher the volume of post-Christmas returns, the greater the likelihood of a busy pre-Christmas shopping period.

In terms of the amount spent online, this also fell by -1.7%, against a disappointing November. However, while it’s been a cold Christmas for online sellers, there were a few crumbs of comfort, though not enough to make a mince pie with. December’s online spend was actually up 7.7% on December 2022’s amount – even though we bought fewer items. And online’s share of December’s entire retail spend was 27.1%, up from 26.6% in November.

As retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph after a concerning start to the year.

ParcelHero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030. Read the full report here .