UK retail’s Golden Quarter loses its shine, fashion struggles

UK retail’s Golden Quarter loses its shine, fashion struggles

Any hopes of a glittering Christmas for retailers faded Friday as this year’s Golden Quarter sales “plummeted”, BDO said, calling December the “worst performance” since its records began in 2017. And fashion retailers were hit the hardest.

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The poor performance will set retail alarm bells ringing, according to the consultancy and data company, as Golden Quarter sales are usually expected “to bolster profits and give retailers the capital they need to invest”.

Sophie Michael, Head of Retail and Wholesale at BDO, said: “There is a real risk that 2024 will see more store closures and more retailers struggling as consumers flock to those that can offer a better in-store or online experience, product range or more competitive pricing.”

So what happened?  The fashion sector performed particularly poorly in the run-up to Christmas, according to the BDO’s High Street Sales Tracker, with sales falling 6.1% compared to 2022, and in-store sales plummeting 7.5%.

Sales in the lifestyle and homewares sectors fell less sharply, but still declined 0.2% and -1.6%, respectively.

That meant overall sales (fashion, lifestyle and homewares combined) fell by 2.7% compared to 2022.

BDO’s Michael confirmed that 2023 was “only the third year on record with negative in-store sales in each of the three months leading up to Christmas”. It last happened in 2015.

She added: “Taking into account inflation, which remains high, the seriousness of these results should not be underestimated.”

BDO said the month started negatively, with sales falling 3.49% in week one, and then they worsened, with sales in discretionary categories falling 6.25% in week two and 4.49% in week three.

Despite an uptick in the week leading up to Christmas Eve, sales fell again in the final week of December, by 3.58% compared to the same period last year.

Michael continued: “This concerning set of results means that retailers have failed to generate the much needed revenues in the critical period, leaving them with relatively high seasonal stock levels as they enter the new year. This will no doubt have an impact on their already squeezed margins and their ability to generate cash for future investment.

“In contrast, it’s been widely reported that supermarkets have performed well over Christmas. Consumers have clearly chosen to channel their discretionary spend [to food] rather than on new outfits or gifts. This will be of significant concern to those retailers heavily relying on discretionary spend.”

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