ONS: Unexpected Decline In December Retail Sales

The ONS has published retail sales data for December, covering the five weeks from 24 November to 28 December 2024.

Key points

• 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% in our last publication). Over the year to December 2024, sales volumes rose by 3.6%, following a large fall in December 2023.
  
  
• When compared with their pre-coronavirus (COVID-19) pandemic level in February 2020, volumes were down by 2.5%.
  
  
• Looking at the quarter, there was a 0.8% fall across the three months to December 2024 (Quarter 4), when compared with the three months to September 2024 (Quarter 3). When comparing with the same period last year, there was a 1.9% rise. 
  
  
• In 2024, the official date for Black Friday was 29 November, falling within our December reporting period, which covers five weeks from 24 November to 28 December 2024. Looking at non-seasonally adjusted data (which doesn't adjust for Black Friday being in the December 2024 reporting period or usual Christmas spending in December) sales volumes rose by 10.0% over the month to December 2024.  
  
  
• Food stores sales volumes fell 1.9% on the month, putting index levels at their lowest since April 2013. The monthly fall was strongest within supermarkets, but sales volumes also fell in specialist food stores (such as butchers and bakers), and alcohol and tobacco stores (including vaping shops). Retailer commentary reported lower than expected sales performance.
  
  
• This fall was partly offset by a rise in non-food stores sales volumes (the total of department, clothing, household and other non-food stores) which increased by 1.1% over the month. Clothing stores had the largest upward contribution, rising by 4.4% in December, rebounding from falls of 3.5% in November 2024 and 3.3% in October 2024. Department stores and household goods stores also rose over the month which retailers attributed to stronger Christmas sales.
  
  
• The amount spent online, known as "online spending values", rose by 1.5% during December 2024, the first monthly rise since September 2024. Sales values rose by 1.7% when comparing December 2024 with December 2023, but fell by 3.3% when comparing Quarter 4 (Oct to Dec) 2024 with Quarter 3 (Jul to Sept) 2024.
  
  
• Total spend – the sum of in-store and online sales – rose by 0.1% over the month. As a result, the proportion of sales made online increased from 26.5% in November 2024 to 27.0% in December.
  
  
• The change in the timing of Black Friday is accounted for by a seasonal adjustment approach. Some retailers reported that Black Friday sales started well in advance of the official day.

2024

• Retail sales volumes rose by 0.7% in 2024, following a fall of 2.9% in 2023 and of 4.1% in 2022. Although this marked the first rise in three years, sales volumes have not returned to 2022 levels.
  
  
• In 2024, all main sectors, except food stores, rose on the year. Despite food stores sales volumes falling in 2024, this was a smaller fall than in 2022 and 2023.
  
  
• While in 2024 non-food stores remain below their 2022 levels, sales volumes for non-store retailers and automotive fuel sales have both recovered beyond their 2023 fall.

Commentary

Responding to the latest ONS Retail Sales Index figures, which showed sales up 3.5% by value, and up 2.9% by volume, Kris Hamer, Director of Insight at the British Retail Consortium, said:

“Retail sales picked up in December, but this unfortunately did not offset the shaky start to the ‘Golden Quarter’. In non-food, electricals, beauty and books made for popular presents. Meanwhile, sales of furniture and other large ticket items were hard hit as families continued to think twice before making larger purchases, and clothing and footwear sales remained muted.

“While retailers welcome this boost to sales, it will barely touch the sides of the £7bn in new costs from the Budget facing the industry in 2025. Higher employer national insurance contributions, higher National Living Wage, and a new packaging levy will heap pressure on an industry that is already paying more than its fair share of tax. With retailers doing all they can to absorb existing costs, two thirds of CFOs report they are left with little choice but to increase prices, and reduce investment in jobs and shops. To mitigate this, Government must ensure that its proposed business rates reform does not result in any shop paying higher rates than they already do.”

David Morrison - Senior Market Analyst at Trade Nation comments:

“While retail sales volumes fell by 0.3% in December 2024 compared to November, the annual data tells a more positive story, with sales volumes rising by 0.7% over the year. This marks the first annual growth since 2021, a welcome sign of recovery after consecutive declines in 2022 and 2023. However, sales volumes remain below pre-2022 levels, reflecting ongoing challenges for the sector. 

The December figures also highlight a continued shift in consumer behaviour, with online sales gaining momentum across most sectors. Significant increases in online sales were seen in household goods and clothing stores, while even food retailers experienced a boost. As digital channels grow in importance, businesses that embrace this transition will be better positioned to meet changing shopping habits and sustain growth in the months ahead.”

Source : ONS, BRC, Trade Nation

Image : IR Stone / iStock / 613320612

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