UK bricks and mortar sales have stronger-than-expected November, but Omicron threatens festive figures
Black Friday deals on toys, clothes and tech pushed UK retail sales up by a better-than-expected 1.4 per cent in November, as shoppers hit the high street for their early Christmas shopping, the Office for National Statistics said today.
Last month’s UK retail sales figures were 4.7 per cent higher than a year earlier, the ONS said, and jumped 0.8 per cent from October this year.
They were also ahead of analysts’ consensus estimates of a continued steady growth at 0.8 per cent, and 4.2 per cent higher than last year.
This growth was driven by a 2 per cent month-on-month growth in non-food sales – which includes clothes, toys, computers and jewellery – as retailers reported strong trading during the Black Friday deal period and in the lead-up to Christmas.
In the three months to November, however, sales were down 0.6 per cent from the previous three-month period, but still 0.5 per cent stronger than the same period last year, when more lockdown restrictions were in place.
Clothing store sales were particularly strong, the ONS said, rising above their pre-pandemic levels for the first time, and reaching 3.2 per cent above their February 2020 level.
Jessica Moulton, Senior Partner at McKinsey, said that a “‘more goods, less travel’ mentality drove elevated purchasing in November,” but warned that due to the emergence of the Omicron variant, “it remains to be seen how Christmas will net out.”
Heather Bovill, the deputy director for surveys and economic indicators at the ONS, did point out that this growth in high street sales was contrasted with weaker online sales – which fell to just 26.9 per cent of total retail.
“With more consumers choosing to visit the high street and retail parks, the proportion of online sales continued on a downward trend, to their lowest level since March 2020,” she said.
While some analysts suggested that the rise of the Omicron variant will push consumers back to their virtual baskets, others argued the fresh figures showed in-person shopping was back on the rise.
Ralph Robinson, Head of Retail at technology consultancy BJSS, said the drop in online sales as a proportion of total sales would be a “welcome boost for those retailers with large physical estates.”
“This gives some hope that shopping habits might not have been irreversibly changed as a result of the pandemic.”
But analysts at AJ Bell warned that it could be a different story for bricks and mortar stores.
“Footfall is down dramatically and there will be some consumers deciding what they don’t have now they won’t be buying, or they’ll resort back to their virtual baskets,” said Danni Hewson, AJ Bell financial analyst.
Other market analysts warned that sales numbers would be short-lived, as the new variant surges across the country in the crucial lead up to Christmas this month.
“It’s going to be a rough ride through the next few months for retailers, many of whom were hoping that a pick-up in festive spending would be enough to see them through,” said Emma-Lou Montgomery, associate director at Fidelity International.
“Inflation is up at a 10-year high and cutting into household budgets, footfall is on the decline as Plan B takes effect and the rates of Omicron climb, and having enough workers to keep the tills ringing is a mounting challenge.
“With interest rate rises also about to hit consumers’ pockets, 2022 could be a tough year all round.”