Retail sales volumes (quantity bought) are estimated to have fallen by 0.3% in December 2024, following a small rise of 0.1% in November 2024 (revised down from 0.2%), the latest figures from the Office for National Statistics (ONS) reveal.
Falls in supermarkets were partly offset by a rise in non-food stores, such as clothing retailers, which rebounded from falls in recent months.
Looking at the quarter, sales volumes fell by 0.8% in Quarter 4 (Oct to Dec) 2024 compared with Quarter 3 (Jul to Sept) 2024 but rose by 1.9% compared with Quarter 4 2023.
Silvia Rindone, EY UK&I retail lead, comments: “It was a mixed picture for retailers in December, leading to a somewhat disappointing end to the year. After a small rise in November, retail sales volumes fell by 0.3% in December, leading to a 0.8% fall in volumes for the final quarter of 2024.
“The overall fall in sales volumes was marginally offset by non-food sales volumes which increased by 1.1% in December. This however, was driven by Black Friday sales and is unlikely to be a sign of sustained recovery. Clothing saw the largest increase, with volumes rising by 4.4%. The amount spent online during December also rose by 1.5%- the first rise since September 2024.
“Despite the overall mixed results, several food retailers saw record sales in December driven by growth in premium own-label products as consumers opted to splash out over the festive season.
“Today’s figures demonstrate the growing divide between retailers who have adapted to changing market conditions and those who have not. The latter are increasingly falling behind as consumers become more selective about their spending.
“Looking ahead, there are several challenges on the horizon in 2025, with retailers predicting declines in sales volumes and increased tax burdens. Rises in National Insurance and the national living wage will impact business costs, prompting many retailers to consider price increases to offset these overheads.
“Despite supressed consumer confidence, many retailers are delivering strong sales and volume growth. These are driven by clarity of their proposition, a deep understanding of their customers’ needs and excellent operational skills. Retailers that have failed to invest in their capabilities or proposition are more likely to be struggling and its unlikely consumer demand will increase quickly enough for many.”
Asif Aziz, retail director at EE comments: “The golden quarter proved unworthy of the name as the sun set on what was a challenging year for the retail industry in 2024. Despite a difficult backdrop, at EE we saw strong demand in-store and online for smart tech as consumers continue to explore how it can improve their everyday lives.”
“As we move into 2025, we anticipate continued cautious spending from households in the face of economic uncertainty. Our focus will be to continue delivering exceptional customer service, offering personalised shopping experiences and ensuring we meet the evolving needs of our customers.”
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “Festive spending failed to provide a much-needed boost to retail in the latter part of 2024, with sales falling both month-on-month and quarterly. This worse-than-expected performance for the sector, particularly in food, reflects how nervous consumers are still making cut backs despite the easing of inflationary pressures. A boost to clothing could be explained by a cold snap of weather and gift giving, but this was offset by a surprisingly poor performance for food – despite many grocers reporting strong festive results.
“Our Deloitte Consumer Tracker data shows that one in two consumers were generally more frugal with their December spending and consciously cut down on luxuries. The priority for retail leaders now revolves around combatting looming cost increases, particularly from rising National Insurance Contributions. Consumer confidence is showing signs of resilience, but isn’t recovering at the rate needed to lift spending. Therefore, retailers must remain focused on navigating these upcoming challenges to ensure long-term profitability and stability in a very challenging environment.”
