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Weak consumer demand slows retail sales in January

By Danielle Wightman-Stone


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Leeds High Street Credits: Unsplash

UK total retail sales slowed in January, increasing by just 1.2 percent, against a growth of 4.2 percent in January 2023, as high cost of living enters third year.

According to the latest British Retail Consortium KPMG Retail Sales Monitor, weak consumer demand meant that retail sales growth slowed, below the 3-month average growth of 1.9 percent and below the 12-month average growth of 3.4 percent.

Clothing sales were particularly impacted by the mild temperatures, added the BRC, and “performed poorly”. Non-food sales decreased by 1.8 percent year-on-year over the three months to January, against a growth of 2.9 percent in January 2023. This is steeper than the 12-month average decline of 0.5 percent.

In-store non-food sales fell 1.5 percent, against a growth of 7.2 percent in January 2023, below the 12-month average growth of 0.8 percent.

The BRC also added there was a drop in online non-food sales, which decreased 4.2 percent in January, against a decline of 4.1 percent this time last year. This was higher than the three-month fall of 2.3 percent and the 12-month decrease of 2.8 percent.

Cost-of-living crisis continues to impact retail sales

Helen Dickinson, chief executive of the British Retail Consortium, said: “Easing inflation and weak consumer demand led retail sales growth to slow. While the January sales helped to boost spending in the first two weeks, this did not sustain throughout the month. Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year. The milder temperatures meant clothing sales performed poorly, particularly winter clothing and footwear. It was better news for health and beauty products, which continued to sell extremely well.

“With the Spring Budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers. Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’. By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”

Linda Ellett, UK head of consumer markets, leisure and retail at KPMG, added: “It may be a new year, but the hangover of low consumer confidence remains, with retail sales growing by a lacklustre 1.7 percent on the high street, and online operators seeing yet another month of negative sales performance.

“Health and beauty purchasing continued to drive sales both on the high street and online, whilst sun seekers and consumers with healthy resolutions front of mind, gave a boost to sports and travel equipment sales, which were up over 4 percent year on year.”

Consumer card spending grew just 3.1 percent in January

The Barclays Consumer Spend report also noted how retail, hospitality and leisure spending slowed in January as Brits stayed at home. Its data revealed that consumer card spending grew just 3.1 percent year-on-year in January, less than the latest CPIH inflation rate of 4.2 percent, yet higher than December’s growth of 2.3 percent.

Spending on essential items increased 4.2 percent, higher than in December when it hit 1.8 percent. However, it adds that shoppers opted to browse the post-Christmas sales from the comfort of their homes instead of the high street. In January, 57.6 percent of all retail shopping (excluding groceries) was online, the highest share of online spending in this category since February 2022. In addition, clothing stores saw a -0.6 percent decline, which was a slight improvement compared to December (-2.0 percent).

Barclays Consumer Spend
BRC-KPMG Retail Sales Monitor