Retailers appear to have paid the price for heavy discounting in advance of Christmas as December figures were at their worst level since the financial crisis.
Retail sales fell by 0.4% in December, the poorest performance since 2008.
Major discounts were offered on November’s Black Friday. The resulting spike in sales led to delays in delivery services.
The delays gave consumers a fright, making them fear that further online orders might not arrive in time for Christmas. Online sales did go up by 7%, but analysts had anticipated higher growth.
Mixed fortunes were reported by established retailers, but Tesco, Sainsbury and Marks & Spencer all saw sales drop off.
According to the British Retail Consortium, food sales rose in December for the first time since Easter and this was attributed to consumers buying premium rather than budget ranges for the holidays. But Tesco and Sainsbury are suffering from the price war among grocers.
“Extensive discounting disrupted the timing and rhythm of Christmas spending,” said the head of retail at KPMG
“It’s now clear that Black Friday did pull festive sales forward into November, and this created a challenging lull in spending with consumers waiting for future bargains. This situation did not reverse until the week of Christmas.
“The launch of Boxing Day sales mixed with new season full price stock saw some phenomenal spending, with fashion retailers achieving double digit growth.”
Among those who enjoyed a boom was furniture retailer Ikea whose sales rose 11% in the final four months of the year as well as record sales after Christmas.
