Christmas ‘unlikely to be bumper one for all’ as consumers focus on budgeting

Spending on cough and cold remedies was a bright spot in November as weak consumer confidence and rising energy bills caused anxiety for retailers in the all-important run-up to Christmas.

A later Black Friday this year, resulting in artificially weaker November figures, still could not disguise figures suggesting it is “unlikely to be a bumper Christmas for all” as many consumers remain focused on budgeting, analysts suggest.

The British Retail Consortium (BRC)-KPMG Retail Sales Monitor covering the four weeks to November 23 – therefore not including Black Friday, unlike last year’s figures for the same period – show total UK sales fell by 3.3% year on year, against growth of 2.6% last November.

Food sales over the three months to November were up 2.4% year on year, although this too was down on last year’s growth of 7.6%.

Sales of products other than food were down 2.1% year on year over the three months to November, against a decline of 1.6% a year ago.

BRC chief executive Helen Dickinson said: “While it was undoubtedly a bad start to the festive season, the poor spending figures were primarily down to the movement of Black Friday into the December figures this year.

“Even so, low consumer confidence and rising energy bills have clearly dented non-food spending.

“Spending on fashion was particularly weak as households delayed purchases of new winter clothing, while health spending was boosted by the season’s arrival of coughs and colds.

“Retailers will be hoping that seasonal spending is delayed, not diminished, and that customers get spending in the remaining weeks running up to Christmas.”

Sarah Bradbury, chief executive of analysts IGD, said: “IGD’s latest research highlights signs of festive cheer, with 5% more shoppers than last year – 41% versus 36% – planning to spend what they want this Christmas.

“However, despite this uplift, it’s unlikely to be a bumper Christmas for all, as many remain focused on budgeting.

“The festive optimism is there, but the underlying caution means spending will still be influenced by economic pressures, especially on out-of-home activities.”

Separate figures from Barclays show consumer card spending was down by 0.5% year on year in November – the first decline since July.

Essential spending fell by 3.1%, its steepest fall in more than five years.

However, overall spending on entertainment was up 10.8%, with bookings for blockbuster films Gladiator II, Wicked and Paddington In Peru seeing cinema spending increasing by 22.8% year on year.

The Barclays Consumer Spend report also shows retail experienced a lull in the run-up to the seasonal sales period after a three-month run of growth, down 2% as November’s cold snap hampered high street footfall.

Supermarket spending fell 1.8%, as 64% of consumers said they were looking for ways to reduce the cost of their weekly shop.

Jack Meaning, chief UK economist at Barclays, said: “Understandably, a number of factors weighed on consumer spending in November, notably easing consumer confidence post-summer, and expectations that, post-Budget, inflation and interest rates will stay higher in the coming months.

“Looking ahead, the extent to which we see a seasonal bounce around Black Friday and Christmas will serve as a good test of the economy going into 2025.”

Published: 03/12/2024 by Radio NewsHub