Christmas comes early for retailers with sales up 1.3% in November

22 December 2023

The latest ONS figures show retail sales volumes increased by 1.3% in November, driven by household goods (up 3.5%), department stores (up 2.3%) and clothing (up 1.3%).

Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, comments: ‘Retailers got their Christmas gift this year, with Black Friday events providing a much-needed boost to retail sales with the biggest rise since January 2023. Recognising that households are feeling the strain, retailers kicked off their Black Friday offers early and throughout November, which prompted consumers to go out and spend.

‘Sales volumes are up 1.3% showing just how important sales events are in these cash strapped times. The continued improvement in consumer confidence and the economy showing signs it’s on the road to recovery will have also encouraged spending. That said, consumers remain cautious and are still having to make considered choices.

‘Looking back at year-on-year the lipstick effect continues to boost cosmetic sales with a 14.1% growth overall, whilst electronics such as computers has had a boost of 42.8% in 2023.

‘After a more encouraging month of the crucial Golden Quarter, the countdown is on for retailers to maximise on sales and end the year on a high. But the last-minute rush that many retailers are hoping for might not come to fruition, as some families cut back on gift giving this year or restrict themselves to smaller budgets. That may force retailers to start Boxing Day sales early and extend discounting throughout January – in what could be a tough start to 2024.’

Thomas Pugh, economist at RSM UK, added: ‘The sharp rise in retail sales volumes in November should help to allay fears that the economy contracted again in Q4 after shrinking by 0.1% in Q3.

‘The fact that retail sales were strong across the board chimes with many surveys, including the RSMUK MMBI Q4 results, which suggests that the economy continued to eke out some growth in the final quarter of the year. Indeed, there are good reasons to expect consumer spending to rise in Q4 and through next year. The sharp fall in inflation in November means real wages are now rising and should increase sharply over the next year as inflation drops more steeply than wage growth.

‘What’s more, consumer confidence has almost completely recovered from its sharp drop in October, although it is still below its pre-crisis level. That will prompt consumers to spend more rather than save.

‘However, for a large portion of households any increase in incomes will just be eaten up by higher mortgage and rent costs, reducing their disposable income. As a result, while we do expect consumer spending and retail sales volumes to gradually rise, we aren’t expecting a boom in consumer spending.