Brexit-charged inflation bites into non-food spending

Spending on non-food items in the run up to Christmas declined at its deepest rate since 2009 as consumers prioritised grocery shopping over gifts.

According to the British Retail Consortium, non-food retail sales in the UK decreased 1.9% on a like-for-like and 1.4% on a total basis in the three months to December.

This is below the 12-month total average growth of 0%.

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In-store sales of non-food items declined 3.7% on a total basis and 4.4% on a like-for-like basis, the deepest since BRC’s records began in December 2012.

Online sales of non-food products grew 7.6% in December. This is below the 12-month average of 8% but above the 3-month average of 6.2%.

BRC chief executive Helen Dickinson said that with inflation outpacing growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts.

British inflation rose to its highest in nearly six years in November at 3.1 percent, largely as a result of the pound’s fall after June 2016’s Brexit vote.

“That made this year’s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales,” explained Dickinson.

“These promotions came as a welcome relief for stretched households, although the late lift in sales came at the expense of margins for many retailers.

“Retailers who did well in such a challenging environment got both their discounting strategy and omni-channel offerings right. Those who could offer and deliver on last minute delivery options did better, boosting online non-food sales more than 15 percent in the seven days before Christmas, a week when, until now, shoppers would have had to turn to stores to ensure gifts made it under the tree in time.”



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