PwC comments on December 2021 ONS retail sales figures

Commenting on the Office of National Statistics retail sales figures for December 2021

Lisa Hooker, consumer markets leader at PwC, said: 

“With the arrival of the Omicron variant and work-from-home guidance, it was no surprise that headline retail sales fell on a month-on-month basis by 3%.

“Much of this was to be expected, with Christmas shopping already brought forward by consumers wanting to make sure their presents arrived in good time after the disappointment and tier restrictions of last Christmas which had already boosted November’s sales. As a result, many retailers had already banked their improved performance, as demonstrated by the trading updates and profit upgrades of the past few weeks.

“Another reason for consumers shopping earlier was the much-publicised risk of supply shortages, particularly in electricals, household goods and toys, which explains the relatively faster decline in non-food retail sales vs. the previous month. These stock shortages were also reflected in promotional levels, which fell significantly compared to previous years, leading to fewer bargains in both the Black Friday and Boxing Day sales.

“Meanwhile the hardest hit fashion category slipped back below pre-pandemic sales levels as parties and celebrations were hastily cancelled or scaled back in the run-up to Christmas.

“One positive for the high street is that, despite government guidelines and the inclement weather, online retail actually reduced its share of sales compared with the previous month, in contrast to the trend earlier in the pandemic.

“Nonetheless, in a continuation of the post-lockdown trends, retail sales, excluding petrol, were also comfortably ahead of both last year and almost 8% ahead of pre-pandemic levels. As lockdown savings continue to unwind and with consumer sentiment still above long-run averages, this gives the sector a sense of hope in the face of the cost-of-living headwinds that shoppers will inevitably face in the coming months.

“Also, PwC’s latest global CEO survey found particular confidence in the prospects for both the UK economy and its attractiveness to inbound investment and M&A, providing a positive backdrop despite the challenging environment.”