High street suffers worst Christmas since 2008
● Moves ‘could threaten iconic Scottish brands and result in major redundancies’
Retail sales growth flatlined in December – the worst Christmas performance for a decade.
Total retail sales showed no year on-year growth in December, the British Retail Consortium-kpmg retail sales monitor revealed, marking the worst December performance since 2008.
The poor sales figures come despite heavy discounting by retailers throughout the festive period in an attempt to lure in shoppers.
Retailers have suffered their worst Christmas in a decade as consumers tighten their belts amid uncertainty over Brexit, new figures have revealed.
Overall sales were flat in December, against an increase of 1.4 per cent in the same period the previous year – the lowest growth since April 2017 and the worst Christmas sales period since 2008.
The poor sales figures from the British Retail Consortium come despite heavy discounting by retailers throughout the festive period in a bid to lure in shoppers. Sports Direct boss Mike Ashley branded the prechristmas sales period the “worst … in living memory” for retailers.
Some firms – including Ashley’s House of Fraser – have posted disappointing results for the period but others, including discount supermarkets Aldi and Lidl have seen near-double-digit growth.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Squeezed consumers chose not to splash out this Christmas with retail sales growth stalling for the first time in 28 months. The worst December sales performance in ten years means a chal-
lenging start to 2019 for retailers, with business rates set to rise once again this year, and the threat of a no-deal Brexit looming ever larger.”
She added: “The retail landscape is changing dramatically in the UK, while the trading environment remains tough. Retailers are facing up this challenge but are having to wrestle with mounting costs from a
succession of government policies – from the apprenticeship levy, to higher wage costs, to rising business rates.”
Online retailers fared marginally better than their bricks and mortar equivalents. Online sales of non-food products grew 5.8 per cent in December, against a growth of 7.6 per cent in December 2017 – above the three-month average of 5.5 per cent, but below the 12-month average of 6.9 per cent.
Over the three months to December, food sales increased by 0.6 per cent on a like-for-like basis and 1.8 per cent on a total basis, but this was below the 12-month total
average growth of 3.1 per cent. Paul Martin, UK head of retail at KPMG, which co-authored the report, said: “This comes despite some retailers desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers.
“As many retailers report their festive trading performance, the list of winners and losers will become clear, but winning means more than just improving sales. Retailers have to protect their margins in order to deliver a profitable festive season.”
Retailers have condemned plans to stop supermarkets from promoting foods high in sugar, salt and fat in a bid to tackle the obesity crisis.
Experts from bodies which represent retailers north of the Border said that the moves proposed by the Scottish Government could hit companies hard, resulting in job losses.
The Scottish Grocer’s Federation said that plans to restrict grocery promotions such as multibuys for such foods were “lacking in evidence, badly thought through and unenforceable”, while the Scottish Retail Consortium (SRC) also said it had concerns over the plans and urged the gov- ernment to delay any measures which might disrupt the grocery market even further ahead of a potential no-deal Brexit.
The Food and Drink Federation Scotland (FDF) warned that one member alone – described as an “iconic Scottish brand” – could lose £1 million in sales as a direct result of such measures, whch it said would “likely result in major redundancies”.
The comments were made in response to a consultation issued by the government at the end of last year.
The SRC said that if the UK leaves the EU “in a disorderly manner”, that would have “immense consequences for food and drink retailers”.
It added: “In that event we would strongly urge the Scottish Government to defer moving forward on these proposals (and indeed other policy measures which add burdens to the food and drink industry) until a stable supply chain is restored.”
Ewan Macdonald-russell, head of policy at the SRC, said: “We want to work with government to help our customers through proportionate evidence-based policies, which establish a level playing field and effectively engage with the challenge of obesity.
“However, we have some significant concerns. There is a dearth of detail over the exact definition of products, categories, and store areas. We also oppose proposals to limit the advertisement of temporary price promotions. We don’t believe there is evidence which shows these promotions encourage over-consumption.”
John Lee, head of public affairs at the SGF, said: “Retailers should be allowed to use a wide range of promotions to ensure they stay competitive and provide customers with the value for money they have come to expect.”
David Thomson, chief executive of FDF, said: “The promotion to adults of all foods is a fundamental commercial freedom.”
He added: “Iconic Scottish brands who sell more of their products in Scotland will be disproportionately affected by restrictions, such as banning of end of floor displays and free samples.”
A Scottish Government spokesman said: “We invited views on whether certain types of restrictions are practical and desirable. We will consider all the responses we have received in due course.”