Festive golden quarter falls short for UK retailers as shoppers hold back

Britain’s retailers have suffered another blow after budget-conscious consumers reined in their Christmas spending, disappointing hopes of a bumper festive season and leaving the “golden quarter” with only muted growth.

Figures from the British Retail Consortium (BRC)-KPMG Retail Sales Monitor show that total sales rose by just 0.4 per cent over the three months to December, compared with the same period in 2023. Households wary of rising living costs appear to have kept a tight grip on their wallets in the final weeks of 2024.

Helen Dickinson, chief executive of the BRC, noted that the “crucial ‘golden quarter’ failed to give 2024 the send-off retailers were hoping for” after what has already been a challenging year of weak consumer confidence and economic strain.

Overall sales grew by 0.7 per cent in 2024, compared with 2023, but a 3.3 per cent uplift in food sales was dented by a 1.4 per cent drop in non-food categories. Clothing, footwear, computing, furniture, and toys were among those areas hit by more cautious spending.

Although December – combined with the impact of Black Friday at the end of November – yielded a 3.2 per cent year-on-year lift, the BRC suggested those figures were flattered by the late timing of last year’s Black Friday deals. AI-enabled gadgets and beauty advent calendars proved to be holiday bestsellers.

Dickinson said food sales “fared better” in December, inching up by 1.7 per cent year-on-year, although this was weaker than the 6.3 per cent growth seen in December 2023. Some shoppers opted to trade up to more premium food items for Christmas, offering some respite for grocers.

Linda Ellett, head of consumer, retail and leisure for KPMG UK, described the run-up to Christmas as showing “minimal” growth, reflecting the “ongoing careful management of many household budgets”. Data released by the BRC also pointed to a “drab December” on high streets and in shopping centres, with footfall likely affected by wet and windy weather.

Separate figures from Barclays revealed flat consumer card spending growth in December, suggesting that the combination of cost pressures and economic uncertainty has weighed on dining out and discretionary spending.

The retail sector’s lacklustre festive period raises concerns over how individual businesses fared. A flurry of post-Christmas updates from major players such as Next, Tesco, Sainsbury’s, and Marks & Spencer is expected to offer more insight, although many non-food retailers are braced for disappointing results.

Discount grocers Lidl and Aldi have both reported year-on-year increases in total festive sales, at 7 per cent and 3.4 per cent, respectively, but they have not provided like-for-like figures excluding new store openings.

The BRC has warned of a “spending squeeze” this January after public confidence in the economy slid by eight points to minus 27 last month. It forecasts sales growth of only 1.2 per cent this year, falling below the 1.8 per cent shop price inflation and implying a drop in sales volumes.

On top of that, retailers face a projected £7 billion increase in costs due to rising national insurance contributions, an uplift in the national living wage announced in October’s budget, and new packaging levies. The trade body warns that covering these costs by raising prices or cutting investment will harm the sector further and undermine high streets.

The BRC urged the government to “find ways to minimise this”, beginning with a planned review of business rates to prevent stores from facing higher bills than they do currently.

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Festive golden quarter falls short for UK retailers as shoppers hold back