Retail Sales Decline as Black Friday Deals Fail to Lure Shoppers
Retail sales unexpectedly dropped in November, as Black Friday promotions fell short of enticing shoppers. Here’s a closer look at the recent figures and insights affecting consumer behavior:
– Sales Trends:
– Retail sales volumes declined by 0.1% last month, contrary to forecasts predicting a 0.4% increase.
– Supermarket sales have now decreased for four consecutive months.
– While Black Friday discounts didn’t boost overall spending as in previous years, purchases of computers, clothing, and furniture have increased in recent months.
– Consumer Confidence:
– A December survey indicated that consumer confidence has rebounded to a 16-month high.
– Households are feeling more optimistic about their financial future, even though overall sentiment remains cautious.
– Economic Insight:
– Oliver Vernon-Harcourt, head of retail at Deloitte, noted that the recent cut in interest rates to 3.75% could bolster shopper confidence, potentially revitalizing consumer spending during the vital pre-Christmas period.
– The Bank of England reported that businesses found consumers are keenly focused on value for money, which could explain the restrained spending.
– Influence of Budget Speculation:
– Danni Hewson, head of financial analysis at AJ Bell, highlighted that uncertainties around possible tax hikes have made consumers cautious, especially at the height of the festive shopping season.
– Mark Neale, CEO of Mountain Warehouse, stated that speculation surrounding the Budget has negatively affected the retail sector, although his company experienced record sales.
– Black Friday Participation:
– According to the Office for National Statistics (ONS), 31% of adults intended to take advantage of Black Friday deals, while 19% planned to spend less than they did last year.
– Government Borrowing:
– The ONS also revealed that UK government borrowing exceeded expectations in November, reaching £11.7bn, surpassing analyst predictions of approximately £10bn.
– This figure represents a reduction of £1.9bn from last year’s borrowing, marking the lowest November borrowing in four years. The decline was primarily due to increased tax and National Insurance contributions.
– Cumulative government borrowing for the financial year stands at £132.3bn, which is £10bn more than last year at the same time.
– Budget Implications:
– Chief Secretary to the Treasury James Murray emphasized that the recent Budget aims to deliver on our pledge to cut debt and borrowing, noting that £1 in every £10 spent goes to servicing debt instead of public services.
– Conversely, shadow chancellor Mel Stride criticized the government for accumulating escalating debt, pointing to the impact of recent policy decisions.
– Future Economic Outlook:
– Matt Swannell, chief economic adviser to the EY Item Club, warned that the government must significantly reduce borrowing in the coming months to meet the Office for Budget Responsibility’s target of £138.3bn for the current financial year.
As we approach the festive season, the struggle between retail sales performance and consumer sentiment highlights the challenges faced by both shoppers and retailers during this crucial period.