Consumer Insights

Are UK Retail Sales A Canary In The Coal Mine?

Retailers have always had the months of November and December to rely on when sales ever looked less than ideal, but new reports from the U.K. suggest that even though sales might be up as Christmas draws nearer, there are disconcerting signs just over the horizon.

According to a report from CBI, retail sales among U.K. merchants were up in December but only compared to the month prior. In fact, the report indicated that retailers themselves are showing the lowest confidence since 2012 in sales performance during the new year. Barry Williams, distributive trades chairman at CBI, encouraged brands to embrace the coming reality of retail, no matter how uncomfortable it might be.

"It’s no surprise sales have recovered as we head into the final shopping days of the Christmas season,” Williams said in a statement. “It would be ideal if the industry could keep that momentum into the new year, but retailers know 2015 was tough, and they’re expecting 2016 to start in much the same vein.”

The CBI report did find differences in opinions among individual retailers, though. While 14 percent expected sales to plummet in January, 22 percent felt just the opposite. While that eight-point difference might reflect some uncertainty over how U.K. consumers are going to adjust their spending habits after the holidays, the fact that both camps remained in the lower third of market confidence speaks volumes about how brands view the prospects of their own industry.

CBI did find that two product verticals experienced stronger performance than others: groceries and apparel. Also, wholesale retailers and automobile vendors exhibited “robust growth” throughout December, with 48 percent reporting that sales volumes had increased compared to the same period last year. And the fact that not a single company surveyed claimed a decline led CBI to project further growth going in to January.

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