High street retailers have suffered their worst sales performance since the pandemic as pre-Christmas discounts failed to encourage spending, a report found today.
Sales fell 5.8 per cent in November compared to last year amid continuing cost-of-living pressures and ‘wider economic anxiety’, according to accountancy firm BDO.
The total included online sales falling 7.8 per cent while in-store sales dropped 5.5 per cent – resulting in the worst total since the middle of lockdown in January 2021.
Retail experts lamented the ‘disastrous’ figures for the UK’s industry despite heavy discounts throughout November and ‘hype’ around Black Friday and Cyber Monday.
The fashion sector performed particularly poorly in the High Street Sales Tracker with sales down 8 per cent year-on-year as consumers cut back on clothes spending.Â
This year’s overall sales fall also followed a 0.3 per cent decline in November 2023.
Separately, a study from VoucherCodes found consumers are expected to spend £3.33billion on Cyber Monday today – down 0.5 per cent on last year as retailers launch sales earlier and Black Friday falls later than usual in the year.
The total equates to £3.67million spent every minute today. Offline sales are set to rise 4.6 per cent to £1.88billion, but online sales will fall 6.3 per cent to £1.45billion.
It comes amid concerns for an industry bracing for a £7billion hit from the Budget after Chancellor Rachel Reeves decided to raise employers’ National Insurance.
A quiet Oxford Street in London’s West End on the morning of Black Friday last week
Monthly total like-for-like results for this year and last year are shown in the top graph from BDO. The bottom graph shows results for each of the lifestyle, fashion and homewares sectors
Sophie Michael, head of retail and wholesale at BDO, said: ‘These results are disastrous for the retail sector, with just one more month of the so-called ‘Golden Quarter’ left.
‘Despite the hype around events such as Black Friday and Cyber Monday, we’ve seen heavy and prolonged discounting throughout most of November, but this has failed to get consumers spending.
‘All retailers, and particularly those operating within the discretionary spend category, will face an even tougher first quarter in 2025 should this sales trajectory continue into the final weeks of this year.’
She added that the industry had been ‘very vocal about the detrimental impact’ of measures in the Budget on cashflow and their bottom line from next spring.
Ms Michael added: ‘This sense of economic anxiety seems to have reached consumers too, with the cost of living still higher than it has been in previous years and recent announcements about further rises to energy prices.
‘Within this festive period, retailers also continue to face increasing competition for the consumer purse with many customers prioritising spend on leisure and hospitality experiences.
‘As a result, the industry is calling on the government to take note and work with the sector and its supply chain to alleviate some of the upcoming heavy burdens as it looks ahead to a very rocky 2025.’
In BDO’s High Street Sales Tractor for October, the firm had warned Britain’s high street stores to expect an ‘exceptionally tough festive period’ amid concerns over the financial impact of the Budget tax raid.
The retail industry is bracing for a £7billion hit from the Budget after Chancellor Rachel Reeves (pictured) decided to raise employers’ National Insurance
Sales in stores in October were up by only 1.7 per cent annually, which the firm said showed the UK high street’s ‘Golden Quarter’ was off to a poor start.
It comes as a separate Confederation of British Industry survey found the outlook for the British economy has taken ‘a decisive turn for the worse’ since the Budget.
Private-sector firms believe activity will fall in the next three months – marking the first time this year that expectations have been negative.
The hike in National Insurance contributions comes alongside an inflation-busting rise in the minimum wage, higher business-rates bills and a package of workers’ rights that could cost the private sector more than £5billion a year.
Meanwhile, a survey of more than 200 business leaders has revealed worries about the Government’s ability to deliver growth, despite the Chancellor last month promising to not come ‘back with more borrowing or more taxes’.
Some 77 per cent of London Chamber of Commerce and Industry members were not confident that Labour will deliver on its commitment to growth.