November retail sales limp below inflation despite Black Friday discounts
November’s retail performance in discretionary spending categories proved largely underwhelming, according to the latest High Street Sales Tracker (HSST) from BDO. While total like-for-like retail sales, encompassing both in-store and online transactions, registered a modest 3.4% growth for the month, this figure pales when considering that overall discretionary spend growth remained below the rate of inflation. This crucial detail indicates a decline in actual sales volumes, a trend further exacerbated by the fact that these sales have yet to recover the significant 5.8% fall experienced just a year ago.
A closer look at the different retail channels reveals specific challenges. In-store sales saw a mere 1.3% increase, which, though positive, comes against an exceptionally poor baseline of a 5.5% decline in November 2024. This growth rate is still considerably below inflation, signifying a substantial decrease in physical store sales volumes. Conversely, online sales demonstrated stronger growth at 9.9%. However, this figure also follows a negative base of a 7.8% drop in the same month last year, suggesting that online spending is barely managing to return to its November 2023 levels, while simultaneously highlighting the persistent difficulties faced by brick-and-mortar stores in attracting consumer spending.
The much-anticipated Black Friday promotions, often a critical sales driver, surprisingly failed to inject any meaningful boost into retailers' figures or entice shoppers back into physical stores during November. In fact, the week of Black Friday itself recorded the lowest sales growth for the entire month, at a mere 0.38% above the previous year’s equivalent week. This widespread discounting, undertaken with the aim of stimulating sales, has instead placed considerable additional pressure on already strained retail margins, a concerning outcome for businesses operating in a challenging economic climate.
BDO’s Sophie Michael commented on the situation, suggesting that any retailer expectations of consumers holding back their spending until after the late Golden Quarter budget did not materialize into a surge of Black Friday discretionary spending. She emphasized the intense pressure retailers are under to compete for every non-essential pound, a battle made even tougher by persistent food inflation that leaves consumers with less disposable income for discretionary purchases. Michael posited that the upcoming Christmas season might boil down to a "battle between feasting and gifting," as consumers weigh their priorities between festive food and purchasing presents.
Looking ahead, Michael cautioned against the temptation for retailers to extend the heavy discounting observed in November into December and January to boost sales and clear stock. She highlighted that such strategies, while seemingly appealing, inevitably erode margins and profits, which are already under immense pressure. Furthermore, November's data clearly demonstrated that aggressive discounts alone were insufficient to draw shoppers into stores, suggesting that a continuation of this approach may not yield the desired results and could further jeopardize profitability.
