UK Retailers Fail To Raise Christmas Sales For First Time Since Global Economic Crisis Amid Brexit Fears

British retailers failed to increase their Christmas sales in 2018 for the first time since the depths of the global financial crisis a decade ago, adding to signs of an economic slowdown ahead of Brexit.

With parliament in deadlock less than three months before Britain leaves the European Union, consumer spending is fading fast, exposing the weakness of many major retailers who are having to work even harder to win sales and also adapt to the migration to online shopping.

The British Retail Consortium (BRC) said its members reported zero year-on-year total sales growth in December, the worst performance for the month since 2008.

The flat figure was down from growth of 0.5 per cent in November and 1.4 per cent in December 2017.

Like-for-like sales, which strip out changes in store space, dropped by 0.7 per cent, the biggest fall since October 2017 excluding distortions caused by the timing of the Easter holidays.

“This comes despite some retailers desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers,” said Paul Martin, a partner at accountants KPMG who sponsor the survey.

A broader measure of consumer spending from Barclaycard showed spending grew by just 1.8 per cent in December, down from an increase of 3.3 per cent in November.

It was the slowest rise since March 2016 and represented a real-terms contraction after taking inflation into account.

Falling spending on clothing and at supermarkets was partly offset by strong rises in purchases at pubs and restaurants, which is not included in the BRC data.

Thursday’s figures chimed with recent downbeat reports from some of Britain’s biggest retailers.

Trading updates released on Thursday (3) showed that Marks & Spencer suffered another quarter of falling underlying sales in both clothing and food, while department store Debenhams is looking for fresh funding after its sales tumbled.

John Lewis, the employee-owned biggest department store, said demand for beauty products and women’s clothing had enabled it to nudge up sales but its gross profit margins remained under pressure in the “intensely competitive pricing environment”.

“I would say that on average the promotional activity was something in the region of 20 to 30 per cent higher than last year,” Paula Nickolds, managing director of John Lewis department stores, told reporters.

Debenhams Chief Executive Sergio Bucher said the country’s second-biggest department store group would have to find another 80 million pounds of costs to cut in order to protect its profits after slashing prices.

“The market, in general, has been very, very competitive,” he told reporters.

Tesco Stands Firm

Tesco, Britain biggest retailer, emerged as one of the few winners from the festive period after its own-brand basic ranges combined with premium offerings to fend off rivals at the top and bottom of the market and keep its tills ringing.

It attracted 125,000 more shoppers to its stores this Christmas than last, with December 23 the busiest Sunday in Tesco’s history. In just one hour it served 766,000 customers.

The solid performance stood in contrast to rivals Sainsbury’s and Morrisons which both missed Christmas sales forecasts this week, hit by competition from German discounters Aldi and Lidll.