Business

‘Worst year for retail in 25 years’ says trade body

Sales shopping Image copyright Getty Images

Retail sales fell for the first time in 25 years last year, according to the leading UK retail industry body.

The British Retail Consortium (BRC) said total sales fell 0.1%, marking the first annual sales decline since 1995.

Sale in November and December were particularly weak, falling 0.9%, the BRC said.

A separate report from Barclaycard found a rise in consumer confidence had failed to boost festive spending.

The payments firm, which processes nearly half of all UK debit and credit transactions, said that consumer spending growth had declined if inflation was taken into account.

Helen Dickinson, the chief executive of the BRC, said: “Twice the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election – further weakening demand for the festive period.

“Retailers also faced challenges as consumers became both more cautious and more conscientious as they went about their Christmas shopping,” she added.

What is the difference between total and like-for-like sales?

Total sales figures look at all sales, while like-for-like data compares sales from shops that were open the previous year.

Like-for-like sales figures strip out the effects of expansion in a business. Total UK sales declined in 2019 compared with 2018, the BRC said.

This is the first time this has happened since its records began in 1995. However, the volume of the sales in 2019 was still higher than in 2017.

Like-for-like retail sales, which compare sales from shops that were open the previous year, climbed in December, but that was due to a relatively late Black Friday, the BRC said.

Taken together, like-for-like retail sales fell 1.2% over November and December compared with the previous year, it said.

Image caption A rise in cinema ticket sales was one of the few retail bright spots

Payments company Barclaycard said in a separate report that a rise in consumer confidence in the festive period had failed to translate into a boost in festive spending on the High Street.

Supermarket sales contracted by 0.9% in December, and sales at specialist retailers such as toys and gaming stores fell 4%.

However, cinema sales rose by 19%, helped by blockbuster releases including Star Wars: The Rise of Skywalker and Frozen II. Spending in pubs and takeaways also rose over the festive period.

Which shops struggled last year?

A number of High Street retailers either went into administration or announced job losses in 2019.

In November, Mothercare announced its 79 UK stores were “not capable” of achieving a sufficient level of profitability and that it planned to call in administrators. Mama’s and Papa’s also called in administrators.

Bonmarché, the womenswear retailer, fell into administration in October, and was set to be rescued by rival Peacocks.

Luxury jewellery retailer Links of London went into administration in October, putting 350 jobs at risk.

In September, 116 Albemarle & Bond pawn shops shut abruptly.

The Restaurant Group in March identified 76 Frankie & Benny’s restaurants in what it now considers to be unfavourable locations and in September highlighted 42 more sites, which are mainly Chiquitos.

In August, fashion firm Boohoo bought the online business of UK brands Karen Millen and Coast for £18.2m. The firms’ 32 UK High Street stores and 177 concessions, employing 1,100 people, then appeared set to close.

Image copyright Alamy
Image caption Harrogate’s commercial property market is the toughest some experts can recall

Also in August, Sports Direct founder Mike Ashley won the race to buy Jack Wills, while Tesco said it would cut 4,500 jobs across 153 Metro stores.

Sir Philip Green’s Arcadia retail empire was saved by a rescue deal in June that involved the closure of 48 stores and the loss of a thousand jobs.

In May, the collapse of Jamie Oliver’s restaurant chain cost 1,000 jobs.

In April, Debenhams named 22 of the 50 stores it planned to close as part of a plan by new owners to revive the department store chain.

In February, HMV revealed the list of stores set to close after it was bought out of administration by Canadian firm Sunrise Records. However, that same month Patisserie Valerie was bought out of administration in February, saving 2,000 jobs.

Why are shops struggling?

Costs are rising, with business rates, rents and wages taking a bigger chunk of retailers’ expenditure. And with footfall in decline, many shops are simply too big and frequently in the wrong locations.

Also, High Street retailers are under pressure from changing shopping habits, with customers spending one in every £5 online. This move online underlines that the BRC survey does not cover the whole retail market. It doesn’t, for instance, include Amazon and some of the other fastest growing retailers that are outperforming the market.

So are these figures too gloomy?

Certainly, some retail experts see the BRC survey as under-indexed for online retail. A large number of BRC members are traditional High Street retailers that are also most under pressure, such as Marks & Spencer and Debenhams.

Also, Tesco pulled out of BRC membership, although its food numbers are included.

As BBC business correspondent Emma Simpson says: “The figures are a large piece of the jigsaw, but not the whole picture.”

Source: bbc.co.uk

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