RSM comments on ONS retail sales figures for December

Commenting on today's retail sales statistics for December 2018 released by the Office of National Statistics, Andrew Westbrook, head of retail at audit, tax and consulting firm RSM said: 

‘Following warnings from the British Retail Consortium that retailers suffered the worst sales in 10 years in December, today’s figures from the ONS paint a slightly rosier picture of overall performance, with sales value and volume both up on the same period last year by 3.7 and 3.0 per cent respectively.

‘However, sales value and volume in December fell by 0.9 per cent versus November, indicating that consumers’ habits appear to have permanently changed with people bringing forward much of their Christmas shopping into November to take advantage of Black Friday promotions.

‘One area which did see a big rise in December was in the weekly online spend versus the same month last year – up 13.9 per cent. Some online operators have reported a relatively healthy set of Christmas sales numbers. However, some of these figures may be slightly flattering as they won’t have taken full account of post-Christmas returns. 

‘Given this growth in online sales, traditional retailers without a genuine multi-channel offering now look more at risk than ever. 

'Despite the positive outlook from today's ONS data, there is undoubtedly significant distress on the high street with retailers having to compete through heavy discounting to gain their fair share of the market, leading to pressure on margins and profitability. For the retailers that struggled over Christmas, the pressure will now be on to convert stock into cash ahead of the quarterly rent payment date which falls at the end of March.

‘Today’s numbers also point to one concerning trend. If you look at annual rate of growth in terms of the quantity of goods bought, this appears to be flatlining, adding some weight to the notion that we have reached ‘peak stuff’.

‘Looking ahead, we anticipate that the current political volatility will have a dampening effect on consumer confidence and discretionary spending, although the recent fall in price inflation may provide some respite. 

‘We are also likely to see grocers take advantage of opportunities in the lead up to Brexit day as people – rightly or wrongly – start to stockpile and panic buy.’