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Deloitte comments on ONS retail sales

16 December 2022

Commenting on today’s ONS retail sales figures, Oliver Vernon-Harcourt, head of retail at Deloitte, said:

“Retail sales saw a surprising fall in November, as Black Friday deals and the start of the men’s football World Cup failed to encourage more consumer spending. Overall, sales volumes fell 0.4% while values were again lifted by high inflation, rising by 0.5%.

“Food sales volumes rose 0.9% as some consumers opted for at-home dining and entertainment as the cheaper alternative to socialising outside the home. With some consumers shopping early to gather festive foods, this boost for food sales is an early indication that grocers may end up ahead this Christmas.

“Non-food sales slumped despite the long-awaited Black Friday sales, with volumes dropping 0.6% month-on-month. The incentive of discounts was not enough to draw consumers to spend on non-essential items in what will be the most recent blow for retailers who had been hoping on big Black Friday results.

Frosty times ahead for retailers

“With Christmas fast approaching and half of consumers expecting higher overall Christmas expenditure due to rising prices, retailers may find sales this festive season to be cooler than hoped, though the recent cold snap may prove to lift this as consumers seek winter warmers.

“Meanwhile, as Boxing Day sales kick off the traditional end-of-season discounting period, consumers could double down on discounted goods amidst what is likely to be an increasingly competitive promotional environment. Price sensitive consumers will continue to look for value and affordability through 2023.

“Even as inflation begins to fall, inflationary pressures look set to linger for the foreseeable future. As retailers try to clear their stock before the start of a possibly challenging year, some will be more exposed to weakening consumer spending power, particularly those selling non-essential items and household goods. For those retailers, this might may mean a pause on capital expenditure as many will turn their focus towards cost reduction strategies.”