The UK desperately needs some retail magic as shoppers lose confidence under PM Keir Starmer (Image: Getty)
Figures published this morning showed that shoppers are reluctant to open their wallets, with retail sales falling 3.3% in November, in what the British Retail Consortium (BRC) called a “bad start to festive season”.
It certainly is. In November 2023, when the economy wasn’t exactly booming, total retail sales actually grew 2.6%.
Like so many other figures, this one has suffered a huge reversal as economic growth and confidence has ground to a halt since the general election.
November sales were below both the three-month average and the yearly average, leaving retailers terrified of a dismal Christmas to come.
This spells yet but more bad news for our economy and the high street, and shows how shoppers are feeling the pinch, or rather the Grinch.
While food sales did increase 2.4% year-on-year between September and November, that compares to much healthier growth of 7.6% in the same period last year.
Labour even appears to have sunk the e-commerce shopping boom, with online non-food sales crashing 10.3% in November.
BRC chief executive Helen Dickinson said this was “undoubtedly a bad start to the festive season”, said the gloomy economic blame was largely to blame as “low consumer confidence and rising energy bills have clearly dented non-food spending”.
Spending on fashion was particularly weak as households delayed purchases of new winter clothing.
In fact the only spending that did increase was on health, but not for reasons anybody in their right mind would want to celebrate as this “was boosted by the season’s arrival of coughs and colds,” Dickinson added.
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Retailers will be desperately hoping for a better December, and they won may have one factor in their favour.
However, the figures do not include Black Friday, which took place right at the end of the month on November 29.
So that makes the figures look slightly worse than they are, and retails will be desperately hoping for better in the final weeks before Christmas.
Dickinson added: “If not, retailers will be feeling the squeeze from both sides as reduced revenues are met with huge additional costs next year”.
She is referring to the autumn Budget, where Rachel Reeves hiked employers’ National Insurance (NI) contributions, in a move that will cost British businesses £25 billion in total, starting from next April.
The NI hike will cost retailers – you employ a lot of staff – £7 billion extra next year.
Hiking the minimum wage by an inflation busting 6.7% will further add to costs and squeeze profit margins.
It may also trigger price rises on job losses, Dickinson warned.
Linda Ellett, UK head of consumer, retail and leisure at KPMG, said retailers will be hoping that shoppers held back held their fire power for black Friday to “mitigate what is otherwise a disappointing month”.
If not, they could go into full panic mode. They may even be forced to start Christmas sales even earlier this year.
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The UK faces a bleak midwinter as the economy slows and the UK faces a growing risk of falling back into recession.
The worst is that this wasn’t necessary. The UK economy grew by 1.2% in the first half of the year, but just 0.1% in the three months to 30 September, as Starmer and Reeves spread doom and gloom.
When their Budget tax hikes come into force, the gloomy is likely to spread.
Separate research from Barclays confirmed this, showing that spending on household essentials has fallen at its sharpest pace in five years.
Five years!!! As if the last five years haven’t been a bad enough.
Supermarket spend fell 1.8% last month, with spending on essentials such as groceries and fuel, were down 3.1%.
This was the steepest drop since 2019 when Barclays first started collecting the data.
It said two thirds of people are looking for ways to reduce the cost of their weekly shop, amid growing concerns about the state of the UK economy.
Barclays chief UK economist Jack Meaning, blamed falling consumer confidence since the summer, “expectations that post-Budget, inflation and will stay higher in the coming months”.
Happy Christmas everyone.