A double dose of weak data on UK consumer spending has been released, as prices rising faster than wages meant squeezed Britons continued to rein in their buying habits during the Autumn.
Retail sales rose by just 0.6% on a like-for-like basis in November compared to last year, with food sales again accounting for pretty much all the growth, the latest sales monitor by KPMG and the British Retail Consortium shows.
Separate data released by Barclaycard found that household expenditure has contracted in real terms, as consumers ‘cautiously’ managed their spending amid higher inflation and weak wage growth.
Promotions: Black Friday only shifted spending away from Christmas, a new report says
Consumer spending growth stood at 2.8% in November, Barclaycard said, lagging inflation which is running at 3%.
High street spending fell 0.1% in November, while confidence in household finances dropped from 64% in October to 56% last month. It marked the seventh straight month of negative high street spending.
Black Friday week saw non-food sales 40 per cent higher than other weeks of the month, but shoppers just shifted spending away from other parts of the festive period, according to the report.
Non-food sales – which are the focus of Black Friday – fell 1.2 per cent on a like-for-like basis between September and November as the squeeze on household incomes continues to impact discretionary spending.
‘That’s not to deny that Black Friday was a significant event,’ said Helen Dickinson, chief executive at the British Retail Consortium.
‘However, rather than increasing overall sales, the event has shifted spending away from other parts of the festive period, and focuses shoppers’ attentions online and away from stores,’ she added.
Retailers said that this time around, shoppers got tempted only by ‘generous promotions’ during Black Friday, with gaming, wearable tech and ‘internet of things’ doing especially well.
Toys on the other hand – last year’s star performer – saw sales sharply down this year.
Dickinson said this year’s Black Friday demonstrated that in such a tough economic environment, consumers have become ever more careful.
‘That heralds a challenging festive period ahead for retailers and shoppers alike,’ she said.
Shoppers preferred bagging their bargains online rather than in stores this year, with non-food in-store sales down by 3.7 per cent on a like-for-like basis.
New shoes as well as health and beauty products are what filled online baskets in November
Conversely, online non-food sales rose 6.5 per cent on last year and penetration rate hit 27.4 per cent – the highest on record.
This rate of online sales growth, however, is below both the 3-month and 12-month averages of 7.3 per cent and 8 per cent respectively, the report said.
New shoes as well as health and beauty products are what filled online baskets thanks to timely promotion, but toys and baby equipment didn’t appear to make much headway.
‘It’s most likely that growth in toy sales were simply overshadowed by the bumper sales growth recorded last year, rather than being overlooked completely,’ said Paul Martin, head of retail at KPMG.
November’s small rise follows October’s slump, when retail sales fell by 1 per cent – according to the KPMG and BRC report.
Official figures for October, however, painted a more positive picture, with the ONS recording a 0.3 per cent rise in sales.
Alex Marsh, managing director of Close Brothers Retail Finance commented: ‘It will be interesting to see if retailers are able to keep up the momentum this month, or if we’ll see a dip in sales again before a last minute rush in the week leading up to Christmas.’
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