This Christmas, the Office of National Statistics (ONS) recorded a 3.8% increase in the amount spent on general retail, including online sales, compared with the previous year. In particular, some high-street retailers experienced surprise growth in sales, including Marks & Spencer’s, JD Sports, and Next. Online retail did not experience similar levels of success with a reported 8.9% decrease in sales compared to December 2021. The online retail sector faced additional challenges on top of the cost-of-living crisis including the rising cost of deliveries, postal strikes, and customer anxiety over whether parcels would arrive on time. Meanwhile, high street stores were more resilient to these challenges, with many large high street retailers that offer click-and-collect services exceeding their sales expectations.
We analysed the Christmas sales of 62 city and large town centres across Great Britain to gain an understanding of which sectors experienced growth and which got left behind. Across Britain’s town and city centers, four sectors experienced growth in sales compared to December 2021: Food & Drink, Fashion, Grocery, and General Retail.
Sales: December 2022 vs December 2021
The overall average increase in sales across 62 cities and large towns across GB. These towns and cities are defined by the Centre for Cities.
Of the four sectors, Food & Drink experienced the largest growth with a 21% increase in sales. This includes sales made in cafés, pubs, bars and restaurants, as well as fast food delivery services and beverages. Whilst Christmas sales for General Retail were still down by 33% compared to the last Christmas before the pandemic, there was a 7% rise between 2021 and 2022.
City and town centre Fashion sales also experienced an 18% rise compared to Christmas 2021, suggesting a return to in-store purchasing for Christmas 2022. When comparing Christmas Fashion sales to pre-pandemic figures, the results in city centres were slightly lower with a 4% rise. This compares with the ONS figures, which include internet sales, which recorded a 12% rise in clothing stores’ sale volumes compared to December 2021.
The postal strikes in particular were a major factor driving customers to purchase goods in-store, alongside the mounting cost of deliveries due to rising fuel, labour and warehouse costs. Overall, these factors lessened the appeal of online bargains, alongside the cost of returns and long repayment times.
However, the rise in high-street fashion spending was not the same across the whole country. The map below displays how cities such as Sheffield, Oxford and Peterborough struggled to return to pre-pandemic Christmas sales on clothing and shoes. Meanwhile, Newcastle, Norwich and Dundee were cities that experienced a substantial rise in fashion sales (average rise of 20%) compared to pre-pandemic Christmas levels.
The Office of National Statistics subsequently recorded a decline in the proportion of online sales from 25.9% in November to 25.4% in December. Nevertheless, high street brands such as Marks & Spencer showed how they could benefit from a strong digital transformation strategy that includes hybrid services such as click-and-collect. Marks & Spencer indicated that its record Christmas performance was driven by record food sales, as seen across the Food & Drinks sector as a whole. In comparison, online grocery sales were down with both Tesco and Sainsbury’s reporting reductions in grocery orders. Consequently, Christmas 2022 saw customers return to more traditional channels of shopping.
When interpreting the rise in high street sales during the festive period, it is important to note the impact of inflation. While there was sales growth, it was primarily driven by customers spending more as a result of inflation as opposed to actually buying more. In fact, the ONS reported that retail sales volumes fell by 1% in December following a fall of 0.5% in November, suggesting that customers were spending more on fewer items. Beauclair’s data shows this inflationary effect with respect to the Grocery sector. While December 2022 sales rose by 14% in town and city centres compared to the previous month, transactions dropped by 3%. While shoppers stocked up early with their Christmas groceries in November, December’s statistics reflect the rise in food prices and rise in the cost of living.
While the Christmas 2022 sales may have been a pleasant surprise for high street retailers, they need to bear in mind the impact of the postal strikes, inflation, and shoppers reacting to the cost-of-living crisis by searching for in-store discounts. In addition, it isn’t evident that this Christmas’s spending is evidence of a strong bounce back to pre-pandemic consumer behaviour. The Christmas data may just demonstrate that people are willing to spend on events that they think are important, particularly with the return of in-person festive celebrations.