In This Article:
LONDON — Christmas brought little cheer to British retailers, and the new year isn’t looking much better as businesses brace for an onslaught of new taxes and spooked consumers tighten their purses.
According to the latest figures from the British Retail Consortium, the three-month run-up to Christmas known as the “golden quarter” was disappointing, with sales inching up 0.4 percent year-on-year.
More from WWD
Retailers had been hoping for a Christmas boost following a difficult 2024 that saw total retail sales rise 0.7 percent year-on-year. In the 12 months, sales of food rose 3.3 percent, while non-food sales declined 1.5 percent.
Helen Dickinson, chief executive officer of the BRC, described 2024 as a “challenging year marked by weak consumer confidence and difficult economic conditions.” She said the crucial “golden quarter” failed to give 2024 the send-off retailers had been hoping for.
Although non-food was particularly hard-hit in 2024, there were some bright spots, with beauty products, jewelry and electricals delivering strong sales during the Christmas season.
The outlook for 2025 is modest, with the BRC expecting sales growth to average 1.2 percent, below the projected shop price inflation of 1.8 percent.
Dickinson said those numbers mean that sales volumes are likely to fall this year — and at the worst possible time.
She said new packaging levies coupled with the Labour government’s new raft of business taxes and employee protection laws will increase retailers’ costs by 7 billion pounds.
“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. Government must find ways to mitigate this,” she said.
As reported, the Labour government’s first budget, which takes effect in April, is a brutal one filled with 40 billion pounds in tax hikes targeted mainly at small and medium-sized private businesses, the middle classes, and the very wealthy.
The new budget will see a substantial increase in the minimum wage and to National Insurance payments, which businesses make to the state on behalf of employees.
Not surprisingly, business confidence is low, and companies have already begun laying off workers, and putting projects and investments on hold.
In the same BRC report, Linda Ellett, U.K. head of Consumer, Retail & Leisure at KPMG, said retailers’ lackluster performance in the final three months of 2024 reflected “the ongoing careful management of many household budgets during a time when many costs remain at a heightened level compared to past years.”