Retailers bounce back from record poor December performance to beat expectations

The UK’s shops bounced back from a record poor December performance last month, notching up their biggest single monthly gain in close to three years.

The Office for National Statistics (ONS) said that retail sales volumes, which also include online retailers, rose 3.4% during January, up from a fall of 3.3% in December.

It was the fastest rise since April 2021, the month when non-essential retailers were allowed to reopen following the third national lockdown for the Covid-19 pandemic.

“After a very weak December, retail sales rebounded in January with the largest monthly rise since April 2021,” said Heather Bovill, deputy director for surveys and economic indicators at the ONS.

“This means that overall sales have now recovered to pre-December levels, although if we look at the broader picture, they are still below where they were pre-pandemic.

The January reading was also a lot higher than the 1.5% that economists had forecast, according to an average supplied by Pantheon Macroeconomics.

A lot of the change was due to food shops, which saw sales increase 3.4% during the months. The only type of retailer that had a worse performance last month were those selling clothes.

“Sales increased across nearly all retail sectors, and it was a particularly strong month for supermarkets,” Ms Bovill said.

“Household goods stores, sports shops and department store retailers were amongst those reporting robust trading due to January sales promotions.

“A fall in prices at the pump also meant a solid month for fuel sales.

“Clothing shops were the only area not to see growth this month.”

Silvia Rindone, retail lead at consultancy EY, said retailers are normally challenged in January because customers tighten their belts after Christmas.

But the latest data shows this did not happen this year.

“There was sales volume growth in all sub-sectors apart from clothing and footwear, which saw a 1.4% fall in monthly sales volumes,” she said.

“This is largely due to the changing role of the January sales; shoppers no longer queue in the early hours to find a bargain with retailers instead focussing their attention on key promotional dates during the ‘golden quarter’ such as Black Friday and Cyber Monday and discounting far earlier in the season.

“As a result, many shoppers cut back on discretionary spend at the start of the year.”

Kris Hamer, director of insight at the British Retail Consortium, said: “There was promising news as sales volumes rose for the second time in three months, following 19 prior months of decline.

“This reflected rising levels of consumer confidence, as well as a boost from the January sales. Categories, such as computing, and cosmetic and toiletries performed well.”

He added: “Nonetheless, shoppers remained cautious as they entered the third year of the high cost of living.”