Christmas 2016 has brought cheer for retailers - but for how long?
Friday, 20th January 2017
Last-minute Christmas purchases have lifted UK retail sales figures, leading to signs that the UK economy ended strongly in 2016.
Major retailers have released reports that they have enjoyed a record Christmas period in 2016, following last-minute dashes for foods and Christmas gifts. Retailers, including Sainsbury's, Majestic Wines, Morrisons, Aldi and others have all reported an increase in sales, with the British Retail Consortium (BRC) reporting UK retail sales increased by 1.0% on a like-for-like basis from December 2015.
December is a key trading period for many businesses. Last year trading was helped by Christmas Day falling on a Sunday, providing shoppers with the chance to use the weekend for that final dash to the shops. Helen Dickinson of BRC commented that "…the [Christmas] week itself was a bumper one and exceeded expectations… It was a polarised month as shoppers held out for the Christmas week, which saw sales up around 40 per cent compared with the other weeks of the month."
Indeed, the three-months to December, retail sales in the UK rose 1.1% of a like-for-like basis, with food sales seeing the highest three-month average total growth since September 2013. Non-food also saw growth of 1.3% on a total basis.
However, will the good news continue into 2017?
Helen Dickinson of BRC observed that "the challenge for retailers in 2017 will be to create real growth against a backdrop of growing inflationary pressures and persisting economic and political uncertainty." Indeed, Barclaycard, which process about half of the UK's card transactions, noted that some of the reported increased spending from the end of last year may have been down to increased prices, rather than an increase in the volume of items being purchased.
Paul Lockstone, Managing Director of Barclaycard, said: "This could be an early indication of things to come as consumers seem to have entered 2017 with more caution, citing worries about information and the triggering of article 50."
Joanne Denney-Finch, Chief Executive of market researcher IGD, echoed Paul's concerns for retailers in 2017: "Looking ahead, eyes are on the possible return of food inflation, with three-quarters of shoppers anticipating higher prices in 2017. A surge in patriotism could be another important factor, with 45 per cent believing it's more important to buy British-produced food now the UK has voted to leave the EU."
Here's hoping that 2016's Christmas cheer for retailers continues well into 2017 and that the worries and concerns of Brexit and inflation do not result in a slow-down on consumer spending.