Concerns are being raised about the impact of November shopping patterns on the upcoming December sales, but the fashion sector remains resilient. Despite high inflation and low consumer confidence, reports indicate that Black Friday performed better than expected in the UK. However, there are concerns about higher return rates since then. The release of the monthly retail sales reports provides a broader understanding of what happened last month.
According to the BDO High Street Sales Tracker (HSST), heavy discounting leading up to Black Friday and Cyber Monday contributed to a small increase in retail sales. Total like-for-like (LFL) sales rose by 4.1% compared to November 2021. However, in-store LFLs saw the lowest increase since February 2021, at +5.5%. Non-store sales also increased by the same amount. These results raise concerns that many shoppers may have already finished their Christmas shopping during the Black Friday period.
It is worth noting that the 4.1% rise follows a significant 32.1% increase in the same month last year, which was due to the exceptional circumstances caused by the pandemic. November started off weak, with a modest 0.2% rise in total LFLs compared to the corresponding week in November 2021. However, the second and third weeks of November showed stronger performance, with total LFLs surging by 7.25% and 7.3% respectively, as retailers began offering Black Friday deals. Performance decreased in the final week, with total LFLs growing by 4.26% compared to November 2021. While the middle two weeks contributed to the best monthly results since July 2022, this also marks the fourth consecutive month of growth rates below inflation.
On a positive note for the fashion sector, total LFLs rose by 8.5% in November, just below the inflation level. Fashion was the strongest-performing segment throughout the month and achieved its 21st consecutive month of positive growth.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, highlighted that despite the positive LFL results in November, the figures still fall significantly below inflation, suggesting that sales volumes are likely to be considerably lower. Retailers offering earlier and more substantial Black Friday discounts than expected may have cannibalized their own December sales, as many consumers have already completed their Christmas shopping. Given the financial strain on consumer budgets, weak sales in December would not be surprising.
Although footfall increased in November, this did not result in significant growth in in-store sales. Consumers are clearly reducing their discretionary spending, leading to smaller basket sizes. The disruption to public transport across the UK in December will further add pressure to in-store sales.
In conclusion, November’s retail sales showed some positive trends, but concerns remain for the upcoming December period. The fashion sector, however, continues to demonstrate resilience and achieve steady growth despite the challenging environment.
Useful links:
1. BDO High Street Sales Tracker
2. BDO Retail and Wholesale Insights
