Retailers suffered a “drab Christmas”, ending the year with disappointing sales in their most important month, according to new data underlining the difficulties facing Britain’s high streets.
Overall retail sales grew by just 1.2% in December compared with a year earlier, the British Retail Consortium (BRC) said. That was below the 12-month average of 2.3%.
While food sales were resilient, shoppers did not spend as much on non-food products such as clothes and computers, with sales slipping 0.3% compared with growth of 4.4% in December 2024.
The figures cement early indications that non-food retailers had struggled over Christmas – in the face of mild, wet weather and heavy discounting – while food sales held up.
Helen Dickinson, the BRC chief executive, said it was a “drab Christmas” as sales growth slowed for the fourth month in a row.
“Non-food sales fell flat in the run-up to Christmas, with gifting items doing worse than expected,” she said.
“Many people were clearly holding out for discounts, with the last week showing significant growth on the back of Boxing Day and beginning of the January sales.”
Card spending also dropped in December by 1.7% compared with a year earlier, separate data from the bank Barclays found. It marked a further decline from 1.1% in November, and was the greatest year-on-year drop since February 2021.
Rising prices helped support supermarket food sales, and grocery inflation hit 4.3% in December, according to data from Worldpanel by Numerator. It found shoppers spent an average of £476 in supermarkets in December, about £15 higher compared with December 2024.
However, persistently high food inflation means 64% of shoppers intend to cut their spending on groceries this year, Barclays found. More than half plan to reduce their discretionary spending too, with new clothes and restaurant meals on the chopping block.
Discount supermarkets Aldi and Lidl reported record Christmas trading. The UK arm of Aldi posted 3% year-on-year sales growth in the four weeks to 24 December; Lidl said its sales rose 10% in the four weeks to Christmas Eve.
Tesco and Sainsbury’s, the two biggest supermarkets in the UK by market share, reported sales growth over the Christmas period. But shares in both companies fell sharply last week as investors had expected stronger results.
Across much of the industry, sales of general merchandise – which includes products such as clothing, games and jewellery – was weak. Argos, which is owned by Sainsbury’s, performed particularly badly, and sales were down 2.2% in the six weeks to 3 January. It said it had faced “significant headwinds from online traffic trends, a tough and promotional general merchandise market and weak consumer confidence”.
Shares in Associated British Foods, the owner of Primark, have fallen by about 15% so far this year after it issued a profit warning last week amid weak sales at the fashion chain.
Online competition, especially with the rise of cut-price online sellers such as Temu and Shein, has put significant pressure on traditional retailers. The industry is also grappling with higher costs and low consumer confidence.
Three retailers – the jewellery brand Claire’s, the cut-price homewares chain the Original Factory Shop and the clothing chain LK Bennett – are poised to call in administrators.
