Christmas was cool for UK retail, but it sucked for fashion stores

The dust is settling on Christmas 2015 so how was the season overall? Not bad, it seems, even if fashion had a pretty tough time.

UK spending in the all-important festive shopping period grew 2.1% year-on-year, MasterCard SpendingPulse said today, adding that despite deflation and discounting, this retail spending growth shows the strength of UK consumer confidence.

When adjusted for price deflation, November and December spending growth was a healthy 4.4%, with e-commerce volumes up 14%.

And which was the biggest shopping day – newcomer Black Friday or old stalwart Boxing Day? Black Friday was 2015’s biggest day for retail for the first time ever, but Boxing Day sales still grew by 3.1%.

That’s good isn’t it?

So it seems UK retail sales ended the year on a healthy note in the critical nine weeks to Christmas, with that overall 2.1% rise just shy of the 2.2% seen for the full year.

But your interpretation of the word “healthy” depends on which side of the counter you’re on. Shoppers were happy to go on a spending spree because prices were so attractive and it’s no surprise that consumers are feeling confident. But those low prices aren’t necessarily good for retailers.

MasterCard said that “the need for retailers to discount, consumers’ preference to trade down a brand or pricing tier, and price deflation from falling fuel costs gave a significant headwind to sales volume growth.” In short – prices low, buy more stuff.

And some more bad news

The poorest performance across the festive season came from clothing sales. We’ve heard it all before but it has to be repeated – the warm temperatures hindered the sector, which saw weak year-on-year growth at just 0.4% in December, and 0.8% for the two-month period.

While online was strong (up 14% in December and 17% across the last two months of the year), the bad effects of the weather also played a part here.  Sales were boosted not only by huge discounts and improved delivery options but by bloody awful weather! The season may have been unusually warm but it was also miserably wet and that appears to have dampened people’s enthusiasm for going out to shop.

So what does it all mean for this year? Frankly, I wouldn’t like to commit myself to a prediction because every year has been different this decade. I’m just keeping my fingers crossed that 2016 weather is more ‘seasonal’ than it was in 2015.

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