Retailers Hope for a Holiday Miracle as U.K. Consumers Shun Shops

·3 min read

LONDON — Who will visit Britain this Christmas — Santa or Scrooge?

Brands, shops and industry organizations are hoping it’s the former, and that retail sales and consumer confidence bounce back in the run-up to the holidays.

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But concerns — including higher income taxes and interest rates, rising energy costs and ongoing supply chain woes — persist, and could ruin Britain’s first Christmas post-lockdown.

On Friday, the U.K. Office for National Statistics said sales volumes fell by 0.2 percent in September 2021, following a 0.6 percent fall in August. The figures spooked retailers.

Non-food stores reported a fall of 1.4 percent in September sales volumes, and the ONS said that despite relaxation of COVID-19 restrictions over the summer, “in-store retail sales remain subdued.”

The ONS noted that retail sales volumes have fallen each month since April 2021, when nonessential retailing reopened and retail sales reached levels substantially above those before the pandemic.

Taking into account the September decline, this has been the longest period of consecutive monthly falls since the index began in February 1996, the ONS said.

Consumers, understandably, aren’t necessarily in the mood to shop. GfK’s long-running Consumer Confidence Barometer, decreased four points to minus 17 in October, reflecting consumers’ worries about the macroeconomic environment and their own wallets.

Joe Staton, client strategy director at GfK, a consultancy for the consumer products industry, said that after six months of “robust recovery” in the first half of 2021, “U.K. consumer confidence has taken a turn for the worse with all vital signs weakening.”

He said the sharpest concern is how consumers see the future economy.

“Against a backdrop of cheerless domestic news — fuel and food shortages, surging inflation squeezing household budgets, the likelihood of interest rate rises impacting the cost of borrowing and climbing COVID-19 rates — it is not surprising that consumers are feeling down-in-the mouth about the chilly winter months ahead.”

He noted that British retailers are right to be worried in the run-up to Christmas, as GfK is seeing a further decline in consumers’ intention to make major purchases. “The financial mood of the nation has changed and consumers could do with some strong tonic to lift their spirits.”

Jace Tyrrell, chief executive officer at New West End Company, which represents 600 businesses around Oxford Street and Regent Street said that after a challenging year, “we are disheartened to see that retail sales are down from last month, indicating that a gradual return to normality is still far from reach for retailers across the country. We hope a busy upcoming Christmas period will offer some confidence to West End businesses as they gradually recover sales.”

He called on the government for more support in enticing overseas visitors back to the British capital with a simplified visa process and a review of “restrictive” Sunday trading hours.

“Now is the time to give retailers and visitors alike more freedom, as this announcement is clear evidence that we are still far behind where we need to be,” Tyrrell said.

Springboard, which measures footfall on behalf of retailers across Britain, sounded further alarm bells in its pre-Christmas forecast.

Earlier this month, it forecast that footfall across U.K. retail destinations this Christmas will be, on average, 17 percent lower than in 2019. Footfall is set to be lower on high streets and in shopping centers, but retail parks will show “ongoing resilience” this Christmas, strengthening by 5.5 percent.

Springboard also believes that footfall in large city centers will strengthen over the six-week Christmas period, overtaking smaller high streets, “as consumers seek out the Christmas shopping experience they missed last year.”

The lion’s share of shopping will be done before Christmas, with the Boxing Day sales losing their appeal. Springboard said that in the week post Christmas, footfall in high streets and shopping centers will drop by around 20 percent “as Boxing Day sales continue to be less appealing for consumers.”

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