Golden Quarter Sales Rise Amid Persistent Inflation

Total like-for-like sales climbed by +4.1% compared to November 2021
Total in-store LFLs posted the lowest result since February 2021
Results raise concerns many shoppers have already completed Christmas shopping in Black Friday period
Disruption to public transport to put further pressure on in-store sales

Heavy discounting in the run up to Black Friday and Cyber Monday has driven a small uplift in retail sales in November, amid high inflation and ongoing lows in consumer confidence, according to new data revealed by accountancy and business advisory firm BDO LLP.

According to BDO’s High Street Sales Tracker (HSST), total like-for-like (LFL) sales, combined in-store and online, increased by +4.1% in November from a base of +32.1% for the equivalent month last year. Despite Black Friday promotions being spread across much of the month, total in-store LFLs rose by just +5.5%, the lowest result since February 2021. Total non-store sales also rose by +5.5%, from a base of -5.3% in the same month, an unimpressive performance in part due to poor results in the lifestyle and homeware sectors.

November opened with a weak initial performance, with total LFLs recording a rise of +0.20% over the corresponding week in November 2021. The second and third weeks of November saw stronger performance, as retailers kicked off their Black Friday offers, with total LFLs jumping by +7.25% and +7.30% respectively compared to the same weeks in 2021. In the final week performance dropped off, with total LFLs growing by +4.26% over the November 2021 base. While the middle two weeks carried November total LFLs to the best monthly results since July 2022, this also marks the fourth consecutive month of below inflation-level growth rates.

Sector Results

Total LFLs in the fashion sector rose by +8.5% in November, making it the strongest performing segment throughout the month and marking the twenty-first consecutive positive month for total LFLs for the sector.

The homeware sector recorded lower growth than may have been expected, given the uplift that is normally seen with big sporting events, with a total LFL increase of just +1.2% this month. November now represents the fifth positive monthly result this year for the sector, however this low increase could be further evidence that consumers are reducing discretionary spending on bigger ticket items.

November saw a drop of total LFL sales in the lifestyle sector, falling -0.3% compared to November 2021. This result marked the lowest LFL for the category since February 2021, but only the second negative result over the same period.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said:

“Although we have seen positive LFL results in November, these figures are still running significantly below inflation, highlighting that sales volumes are likely to be significantly down. With retailers bringing in much earlier and more substantial Black Friday discounts than many expected, there is a real risk that they have cannibalised their own December sales, as many consumers will have completed their Christmas shopping already. With the consumer purse already under so much pressure, it would be no surprise to see retailers record weak sales in December.

“Although footfall increased over November, this did not translate into significant increases in in-store sales. Consumers are clearly reducing their discretionary spending and this will no doubt feed through into lower basket sizes. Disruption to public transport across the UK in December will also put further pressure on in-store sales.”

“With high living costs and an increasing share of the consumer purse required for essential spend, it is not surprising that a key trend for 2023’s retail environment will be the value-driven consumer, who isn’t necessarily looking for the cheapest item, but is prioritising good value above all else. Retailers already concerned with higher stock levels than normal at this time of year, will have to ensure that they are delivering value for their customers and managing their stock effectively. With continuing high inflation and the cost of living crisis, there is only so much that retailers can do to entice consumers to spend, particularly when it comes to non-essential items. It would be no surprise if festive cheer is thin on the ground this Christmas among retailers, given the outlook for December and beyond.”

The trends found in the HSST are consistent with those of the recent BDO Retail Forecasts Report for 2023, attached.

ENDS

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