Online landed a Black Friday knockout blow on physical retail
Physical store retail plunged deep into recession in December, with non-food spend down 3.3% on 2018. Meanwhile, online triumphed, benefiting from the date shift of Black Friday, with many discount events kicking off on 29 November and spilling over into December. This helped drive a recovery in growth in the final month of the 'golden quarter', with online jumping 8.3%. However, overall retail showed virtually no growth. December's downbeat picture for the sector comes after a November that also saw virtually zero retail growth. Clearly any post-election bounce came too late to save pre-Christmas trading's dismal pattern.
Outside retail, pubs, hotels and restaurants continued their onward march, with spending up 5.4%, but overall consumer expenditure for the month was very weak, rising by just 0.7%. The biggest winner, again, was net saving. In December 2018, households dipped into their bank accounts by an estimated £4.6bn. This Christmas, they barely touched their savings, with a run down of just £0.7bn. This means that just under £3.9bn was taken out of circulation due to lower net borrowing than in the same month a year earlier, representing 4% of total consumer spending. As a result, what could have been a Christmas of healthy spending growth turned into a high street nightmare.
The missing ingredient in the UK consumer equation right now is not so much money as confidence. In the aftermath of the general election, there have been signs of a recovery in indicators like house prices, so early spring trading may prove to be the shot in the arm that so many in retail have been waiting for. (Note: data presented below are non-seasonally adjusted)