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Retailers face a tough Christmas as high-street sales and footfall slow sharply at the start of the ‘golden quarter’
- October started strong, but sales slowed and fell into the last week of the month
- Footfall also stumbled on the slow return to pre-pandemic levels
Retailers are in for a rough Christmas after the number of shoppers visiting stores and selling items plummeted last month, just as energy bills started to climb.
October started off strong, but sales quickly declined and fell into the last week of the month, according to the latest high street sales tracker from consultancy BDO.
Comparable retail sales in stores and online were up 3.5 percent from a year ago, but excluding the first week of the month, store sales grew just 1.8 percent.
“Given the current level of inflation, this means that actual sales volumes have fallen significantly,” said Sophie Michael, head of retail at BDO.
Just watch: Retail sales continue to fall as the cost of living crisis deepens
Retail sales were 6 percent higher than in October last year, but that is the slowest growth since the reopening of non-essential stores after they came out of lockdown in February 2021.
As the cost of living squeezed budgets, sales of lifestyle — including general household items, gifts, health and beauty products, and leisure items — fell 0.1 percent.
“This is the category’s first negative result since February 2021, suggesting that the decline in consumer goods spending has spread to the lifestyle sector, after already seeing record declines for household goods in recent months,” said BDO.
Fashion sales outperformed any other category, rising 6.7 percent, although it marks the third consecutive month of slowing growth.
Michael said the latest numbers marked a “disappointing start” to the so-called “golden quarter,” which includes Christmas and Black Friday and is therefore considered an important period for retailers.
“After a summer of sluggish retail sales growth, retailers had hoped that performance would improve once we hit the Golden Quarter,” she added.
“However, like-for-like sales continue to fall as consumer confidence remains near record lows.”
Pedestrians in the UK have yet to recover to pre-pandemic levels
The slowdown in sales is accompanied by a slowdown in the number of people entering stores in the UK, separate figures show.
Visitor numbers rose 2 percent in October from last year and continue to recover from the pandemic.
However, that is a sharp slowdown from the 8 percent increase in September, according to figures from the British Retail Consortium.
It remains 12 percent below October 2019, before the pandemic started.
BRC chief executive Helen Dickinson said: ‘Footfall stumbled on the slow return to pre-pandemic levels as rising prices and tighter wallets resulted in far fewer consumers going to the shops.
October marked the first full month of higher energy bills for many families after the price cap rose 26 percent, reducing household discretionary spending.
‘Train strikes didn’t help either, and most towns saw a decline in visitor numbers; that could be exacerbated by further strikes.’
The bleak numbers come as the Bank of England warned yesterday that the UK was at risk of entering its longest recession in 100 years after interest rates were raised again to keep inflation at bay.
The Bank said the UK economy was facing a “very challenging outlook” and forecast a recession that could last until mid-2024.