Festive success but head winds for 2022

2020 was a turbulent year in which much of retail bounced between being open and closed, significantly impacting sales and changing consumer behaviours. In November 2020, retail entered a second lockdown, pushing many consumers to buy goods online. In this context, while all comparisons are provided on a year-on-year (YoY) basis, those focused on online/in-store have also been compared with November 2019 (Yo2Y). This will be clearly signposted below.

 Covering the five weeks 28 November 2021 – 1 January 2022

(In December, 12m figures are equivalent to the 2021 annual change on 2020)

• For 2021 overall, Total sales increased 9.9% compared with 2020. Food growth was 3.1% and the Non-Food growth was 15.6% for the year.
  • On a two-year basis, Total retail sales grew 6.6% (Yo2Y) for 2021 compared with 2019.

On a Total basis, sales increased by 2.1% in December, against a growth of 1.8% in December 2020. This is above the 3-month average growth of 2.8% and the 12-month average growth of 9.9%.

• • On a two-year basis, Total retail sales grew 4.6% (Yo2Y) during December compared with the same month in 2019.

UK retail sales increased 0.6% on a Like-for-like basis from December 2020, when they had increased 4.8%. This was above the 3-month average growth of 0.7% and below the 12-month average growth of 8.9%.

Over the three months to December, Food sales increased 0.4% on a Total basis and 0.1% on a Like-for-like basis. This is below the 12-month Total average growth of 3.1%. For the single month of December, Food was in growth year-on-year.

Over the three-months to December, Non-Food retail sales 4.8% on a Total basis and increased by 1.4% on a like-for-like basis. This is below the 12-month Total average growth of 15.6%. For the single month of December, Non-Food was in growth year-on-year.

• Over the three months to December, In-Store sales of Non-Food increased 36.0% on a Total basis and 26.8% on a Like-for-like basis. For 2021 overall, In-Store sales of Non-Food items increased 38.4%, compared with 2020. 
  • On a two-year comparison, over the three months to December, In-Store sales of Non-Food items declined 7.7% (Yo2Y) on a Total basis since December 2019. This is worse than the 2019 Total average decline of 3.1%.

• Online Non-Food sales decreased by 13.9% during December, compared to December 2020 when the UK was in lockdown for large parts of the month. This is below the 3-month decline of 13.3%. Over 2021, Online Non-Food sales increased by 14.3% compared with 2020.
  • On a two-year comparison, Online Non-Food sales increased by 24.4% (Yo2Y) in December. This is above the 3-mth average increase of 23.3%.

• Non-Food Online penetration rate decreased to 45.0% in December from 52.5% in December 2020, during the second lockdown. However, it was up 12.9 percentage points on the 32.1% seen at the same point in 2019. For 2021 overall, the Non-Food Online penetration rate was 46.9%.

Helen Dickinson OBE, Chief Executive | British Retail Consortium

“Despite the recent Omicron outbreak, retail sales held up through December. Many people chose to shop online rather than travel to nearby high streets and shopping centres. Loungewear was back in fashion, as many pre-empted the possibility of future restrictions. Meanwhile, the return of work-from-home advice and reduction in Christmas social events, caused formalwear sales to slow. In the face of rising case numbers and supply chain issues, people in retail pulled out all the stops to ensure everyone got what they wanted this Christmas.”

“Retailers did well to weather the challenging trade conditions, with retail sales for 2021 up on both the previous year and compared to pre-pandemic levels. Continuing a trend throughout the pandemic towards online shopping, 2021 saw a double digit rise in non-food online sales, a testament to retailers’ huge investments in their online platforms. However, retail faces significant head winds in 2022, as consumer spending is held back by rising inflation, increasing energy bills, and April’s National Insurance hike. It will take continued agility and resilience if they are to battle the storm ahead, while also tackling issues from labour shortages to rising transport and logistics costs.”

Paul Martin, UK Head of Retail | KPMG

“Following a strong November, retail sales continued to grow in December increasing by just over 2% compared to 2020, although the spread of the Omicron variant and updated Government guidelines slowed spending during the final weeks of the year.

“Apparel and jewellery continued to dominate Christmas gift buying at the tills, whilst spending on food and drink was solid, although it slowed to just over 1%.

“Consumers continued to head to the high street for their festive gifts, determined to secure the presents they wanted and not leaving online deliveries arriving on time to chance. Footwear was the only online category to see mild growth as overall online sales continued to decline, falling by over 8% in December albeit against strong comparators in 2020.

“As we head into 2022, retailers will be keeping close to Government COVID-19 updates and hoping consumer confidence holds up in order to offset the rising cost challenges they are likely to experience for the foreseeable future.  Retailers have worked hard to manage factors in their control throughout the pandemic to adapt to the changing environment, but there are many macro factors outside of their control that could impact them this year. With many retailers cautiously optimistic for 2022, focussing on continuously re-engineering their business models, ensuring they operate resilient supply chains and have a tight grip on their costs will be the top priorities.

Food & Drink sector performance | Susan Barratt, CEO | IGD

“Food and drinks sales delivered a strong performance in December 2021 and were back in year-on-year growth. This is particularly impressive considering the exceptionally strong sales recorded in December 2020 and indicates that many shoppers took advantage of being able to celebrate Christmas this year with family and friends.

“However, IGD’s Shopper Confidence Index shows that December was a month of two halves. Overall confidence remained unchanged from November; but the index declined at the start of the month as further restrictions were announced to curb the rise of Omicron. However, as most people were able to celebrate with family and friends once again, shopper confidence increased significantly around the festive break. Looking ahead and amid inflation reaching a 10-year high in December, the rising cost of living looks set to shape shopper sentiment in 2022 and our ShopperVista data shows that 86% of shoppers expect food to get more expensive in the year ahead, the highest level since January 2016.”