Shop prices will rise in 2025 as the key Christmas trading period failed to meet retailers’ expectations, according to industry data.
Shop sales grew just 0.4% in the so-called golden quarter, the critical three shopping months from October to December, according to the British Retail Consortium (BRC) and big four accounting company KPMG.
Many retailers rely on trade during this period to see them through tougher months such as January and February. Some make most of their yearly revenue over Christmas.
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The minimal growth came amid weak consumer confidence and difficult economic conditions, the lobby group said, and “reflected the ongoing careful management of many household budgets”, KPMG’s UK head of consumer, retail and leisure Linda Ellett said.
Non-food sales were the worst hit in the four weeks up to 28 December, figures from the BRC showed and were actually less than last year, contracting 1.5%.
Bucking the trends seen in the industry data, however, was Next.
More on Cost Of Living Related Topics: Cost of livingInflationRetailThe homewares to fashion retailer raised its annual profit guidance, for the fourth time in six months, on Tuesday morning by £5m while reporting a 5.7% lift in adjusted full price sales over the nine weeks to 28 December.
The chain credited better than expected growth overseas and in UK online sales.
What were people buying?
Food sales grew 3.3% across all of 2024, compared to 2023.
In the festive period beauty products, jewellery and electricals did well, the BRC’s chief executive Helen Dickinson said.
2:51 Poundland customers left Christmas shopping lateAI-enabled tech and beauty advent calendars boosted festive takings, Ms Ellett said.
What it means for next year
With employer costs due to rise in April as the minimum wage and employers’ national insurance contributions are upped, businesses will face higher wage bills.
The BRC estimates there is “little hope” of covering these costs through higher sales, so retailers will likely push up prices and cut investment in stores and jobs, “harming our high streets and the communities that rely on them”, Ms Dickinson said.
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Separate figures from high street bank Barclays showed card spending remained flat since December 2023, while essential spending fell 3% partly as inflation concerns forced consumers to cut back but also through lower fuel costs.
The majority of those surveyed by the lender (86%) said they were concerned about rising food costs and 87% were concerned about household bills.
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Numerous UK retail giants will update shareholders on their Christmas performance this week including high street bellwether Next on Tuesday, Marks and Spencer and Tesco on Thursday and Sainsbury’s on Friday.