British retailers face a grim start to 2025 after disappointing Christmas sales figures revealed the industry barely grew during the crucial trading period.
The British Retail Consortium (BRC) reported sales growth of just 0.4 per cent during the “golden quarter” between October and December, compared to the same period last year.
The weak performance came as shoppers prioritised spending on food and drink over the festive season.
Total UK retail sales for 2024 increased by only 0.7 per cent from 2023, reflecting cautious consumer spending as households continued grappling with elevated prices.
Separate data from Barclays showed consumer card spending stagnated completely in December, with zero growth recorded.
Retailers are now bracing for £7bn in additional costs from tax increases and new regulations planned by the Government.
Key measures from Labour’s budget include a £25bn increase in employer national insurance contributions from April and a 6.7 per cent rise in the national minimum wage.
Major retailers including Tesco, Marks & Spencer and Next warned Chancellor Rachel Reeves in November that these increased costs would force difficult decisions.
The Chancellor has defended the tax rises as necessary for funding public services and ensuring sustainable Government finances.
In 2024, the UK saw the closure of nearly 37 shops per day, marking another challenging year for the high street, according to new data.
Nearly 13,500 retail outlets shut their doors for good over the past year, representing a 28 per cent increase compared to 2023.
However, the closures were lower than the levels recorded each year from 2019 to 2022, based on preliminary data from the Centre for Retail Research.
Prof. Joshua Bamfield, research director at the Centre for Retail Research, commented: “While store closures in 2024 were not as severe as those in 2020 or 2022, the results are still concerning, and we expect the situation to worsen in 2025.”
He further stated that the group anticipates a similar increase in closures for 2025, with approximately 17,350 stores expected to shut, including around 14,660 from independent retailers.
Helen Dickinson, chief executive of the BRC, warned of severe consequences for high streets and local communities.
LATEST DEVELOPMENTS:
She said: “With little hope of covering these costs through higher sales, retailers will likely push up prices and cut investment in stores and jobs, harming our high streets and the communities that rely on them.”
Recent data shows the strain is already evident, with high street stores recording growth of just 0.1 per cent in the final quarter of 2024.
Sophie Michael from BDO noted that 170,000 shop workers lost their jobs in 2024, warning “this number will only increase in 2025.”
The outlook for 2025 remains challenging, with the BRC projecting retail sales growth of just 1.2 per cent
This falls below the expected shop price inflation of 1.8 per cent, suggesting retail volumes will decline this year.
Linda Ellett, UK head of consumer markets at KPMG, highlighted that sales growth during the golden quarter was “minimal” due to careful household budget management.
Sarah Bradbury, IGD chief executive noted some shoppers traded up for Christmas purchases, but warned this behaviour “could be short-lived.”
