Worst Christmas for retailers in a decade, says BRC

There were a number of discounts in stores in the run-up to Christmas

Retail sales were flat in December, as UK businesses experienced their worst Christmas in a decade, according to the British Retail Consortium (BRC).

Total retail sales showed 0% year-on-year growth during the month, the worst December performance since 2008.

The BRC said price cuts appeared not to have been enough to encourage shoppers.

A separate report from Barclaycard said consumer spending grew 1.8% year-on-year in December, the lowest rate of growth seen since March 2016.

Esme Harwood, director at Barclaycard, said: "Growth in consumer spending dropped to its lowest level since 2016 and represents a decline in real terms."

She added that consumers "remain cautious amidst ongoing economic uncertainty".

• Christmas retail winners and losers

The BRC report came out on the same day as trading updates from some of the nation's biggest retailers.

• Debenhams reported a fall in sales during the crucial Christmas trading period. In a "volatile" environment with customers seeking discounts, Debenhams reported a 5.7% fall in like-for-like sales in the 18 weeks to 5 January.

• Marks & Spencer saw its sales drop over the Christmas holiday period. Like-for-like sales, which strip out the impact of new stores, were down 2.2% in the 13 weeks to 29 December. Food sales fell 2.1% and its clothing and home sales division slid 2.4%.

• Tesco appeared to buck the gloomy trend, saying trading over the Christmas period had been "strong". The company, which is the UK's biggest supermarket chain, says its like-for-like sales over Christmas in the core UK area were up 2.2% in the six weeks to 5 January.

• John Lewis said sales in the seven-week Christmas period were 1.4% higher than for the same period last year. However, that may not be enough to secure a bonus for its staff this year, the firm added.

• Halfords issued a profits warning. It said that that consumer confidence could remain weak into next year, hitting its operating profit.

Looming threats

BRC chief executive Helen Dickinson 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 10 years means a challenging 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."

The BRC said that on a like-for-like basis, UK retail sales decreased by 0.7% from December 2017.

Ms Dickinson said the retail landscape was "changing dramatically" in the UK, while the trading environment remained tough.

She added: "Retailers are facing up to 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."

And Paul Martin, UK head of retail at KPMG, said retail sales had stagnated despite some retailers' best efforts to generate sales through price cuts.

"Growth in food did provide a glimmer of hope, being among the few categories to notice an uptick," he added.

"However, the continued contrast in performance between the High Street and online remained evident in December - albeit 2018 did also see a continued slowdown in online retail sales."