Last-minute gift rush saves retailers' Christmas but online growth falters

Shoppers splurging on gifts in the week leading up to Christmas day boosted sales in December despite a weaker performance from online retailers, a report said.

December's like-for-like sales surpassed Black Friday in November, climbing 1% year-on-year compared with a rise of 0.1% for December 2015, the British Retail Consortium-KPMG survey found.

However, online retailers failed to match previous Christmas performances, with annual online sales of non-food products lifting 7.2% over the period in contrast to 15.1% a year earlier.

Helen Dickinson, chief executive of the BRC, said trading over Christmas had exceeded expectations after getting off to a slow start.

"It was a polarised month as shoppers held out for the Christmas week, which saw sales up around 40% compared with the other weeks of the month.

"Food sales were the major contributor to total growth, while non-food sales on the other hand were sluggish overall, despite a strong performance by categories driven by gifting items.

"In the end, total growth for 2016 was 1.2%; a marginal increase in pound terms over the previous year but lower than the year-on-year growth achieved in 2015."

It came as she warned that retailers would face sustained pressure this year ahead as the Brexit-hit pound drives up prices and knocks consumer spending.

Inflation surged to a two-year high of 1.2% in November in a sign that the pound's sharp fall since the EU referendum result is beginning to affect prices.

Richard Lim, chief executive of Retail Economics, said most retailers would be "quietly pleased" with the performance after fearing a sharp slowdown in consumer spending following the Brexit vote.

"Nevertheless this is likely to be as good as it gets for a while," he added.

"With inflation forecast to hit 3% and the labour market already showing signs of weakening, real wages are expected to shrink this year."

The report said total retail sales pushed 1.7% higher last month compared with a 1% rise the year before, while online sales of non-food products lifted 9.5% year-on-year in the three months to December.

Online sales delivered a "relatively solid performance" in December despite recording its third slowest growth rate for 2016 at 7.2%, Ms Dickinson added.

She said retailers delivering orders up to two days before Christmas Day helped online sales account for nearly a quarter of all retail sales in December.

Separate figures from Barclaycard revealed that spending growth remained at 4% last month compared with December 2015.

While online spending rose 15.1% over the period, clothing sales fell by 0.3% as sterling's slump began to ramp up prices, the report said.