The British Retail Consortium produces unbiased research and analysis on retail performance and the economic drivers influencing the British retail industry. The MIA’s Membership with the BRC gives us access to an expanded portfolio of content to share with our members. We’re pleased to share the headline statistics from reports on UK retail sales and inflation for December 2021
The BRC/KPMG Retail Sales Monitor – a key indicator of consumer demand and the health of the wider economy.
“Festive Cheer to round off a strong year”
December marked the end of 2021 with another month of growth, at 2.1% on a Total basis year-on-year, albeit below the 2.7% growth for the 3-month average that encompasses the entire festive period. The continued growth was encouraging given the concern that the strong results recorded in the previous autumn months were perhaps in part due to Christmas spending being brought forward. But, as the month was in comparison to last December’s partially lockdown affected performance, it may come as a surprise to see that the rate of growth wasn’t higher. However, the final month of the year was not without its fair share of Covid-related adversity, this time in the form of the sudden onrush of Omicron cases that led to a significant amount of uncertainty in the market. For consumers, this stifled spending as social occasions were curtailed and the possibility of another lockdown was the talk of the town. This also did retailers no favours, as they were forced to hedge their bets when it came to stock allocation between their Stores and Online fulfilment centres, which limited stock availability – and therefore spending – in both channels.
In the three months to December, Food sales growth accelerated slightly, to 0.3%, which was driven by the enthusiasm of consumers to enjoy the festivities to their fullest as last year all but the smallest of gatherings between family and friends outlawed – unless for a business meeting of course. Naturally Christmas had a great impact on Non-Food sales as well, as December is the month when spending in the category is far less discretionary than any other time of year. Thankfully for retailers in this sphere spending largely returned to its pre-pandemic pattern, as it ramped up considerably right up until the main event itself. Homewares performed well in the month, with decorations and tableware popular for people to make the most of Christmas. Fashion also saw strong demand, beginning in the first week of the month at the end of Black Friday weekend and, also, as gifting options in the run up to Christmas. However, as the aforementioned Omicron uncertainty increased, social gatherings were curtailed, which hampered the performance for formalwear, following its recent improving fortunes. Tech spending also waned in December, which was largely a consequence of a great deal of demand satisfied earlier in the year.
Overall, 2021 was a successful year for retail, with much of the time dominated by restrictions on areas of the economy that provide competition to retail spending. However, it will also be a year to forget for many retailers, given the headaches and costs incurred due to the strain placed on their logistics capabilities.
Helen Dickinson OBE, Chief Executive, BRC:
Despite the recent Omicron outbreak, retail sales held up through December. Many people chose to shop online rather than travel to nearby high streets and shopping centres. Loungewear was back in fashion, as many pre-empted the possibility of future restrictions. Meanwhile, the return of work-from-home advice and reduction in Christmas social events, caused formalwear sales to slow. In the face of rising case numbers and supply chain issues, people in retail pulled out all the stops to ensure everyone got what they wanted this ChristmasRetailers did well to weather the challenging trade conditions, with retail sales for 2021 up on both the previous year and compared to pre-pandemic levels. Continuing a trend throughout the pandemic towards online shopping, 2021 saw a double digit rise in non-food online sales, a testament to retailers’ huge investments in their online platforms. However, retail faces significant head winds in 2022, as consumer spending is held back by rising inflation, increasing energy bills, and April’s National Insurance hike. It will take continued agility and resilience if they are to battle the storm ahead, while also tackling issues from labour shortages to rising transport and logistics costs.
Shop Price Index Report – Providing an accurate picture of price changes across the most popular locations across the UK
“Price Rises to pick up speed in 2022”
- Shop Price annual inflation accelerated to 0.8% in December, up from 0.3% in November.
- Non-Food deflation accelerated to 0.2% in December compared to the decline of 0.1% in November.
- Food inflation accelerated to 2.4% in December, up from 1.1% in November.
- Fresh Food inflation accelerated significantly in December to 3.0%, up from 1.2% in November.
- Ambient Food inflation accelerated to 1.7% in December, up from 0.9% in November.
Helen Dickinson OBE, Chief Executive, British Retail Consortium:
Consumers may have noticed that their Christmas shop became a little more expensive in December. Not only did prices rise, but did so at a faster rate, especially in food. Food prices were falling earlier on in 2021, but the acute labour shortages across supply chains, amongst other factors, led to the year ending with a notable increase; for example, fresh food saw the largest rate of inflation in almost a decade. Year-on-year non-food products were deflationary, but prices rose across the board on the previous month.The trajectory for consumer prices is very clear: they will continue to rise, and at a faster rate. Retailers can no longer absorb all the cost pressures arising from more expensive transportation, labour shortages, and rising commodity and global food prices. Consumers will already be harder pressed this year, with rising energy bills, the looming hike in national insurance, and more expensive mortgages. Government should relieve some of these costs by looking for long-term solutions for resolvable issues such as labour shortages.
As a member of the BRC, the MIA can share the full reports with our members. If you would like to see either of these reports in full, please contact firstname.lastname@example.org