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BDO: Christmas In Quarantine Leaves Retailers Feeling The Chill

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  • December restrictions usher in first negative total LFL for December*
  • 2020 ends with nine non-consecutive months of negative results
  • Lifestyle and fashion sectors both negative, while homeware soars
  • Online sales falter, recording weakest result since March

Despite a strong start to the month, retailers recorded a disappointing end to the Golden Quarter thanks to heightened COVID restrictions and expanding lockdowns, new figures by accountancy and business advisory firm BDO LLP reveal.

According to BDO’s High Street Sales Tracker (HSST), total like-for-like (LFL) sales, combined in-store and online, declined by -1.6% in December, but from a very good base of +6.6% for the same month last year. Inflated non-store sales since the first lockdown in April have provided a boost throughout the year, but failed to lift total sales onto positive ground in December. Total like-for-like sales have now tallied nine non-consecutive months of negative results in 2020.

Weekly Results and Christmas in Quarantine

December weekly results showed promise at the beginning of the month, but positive signs were swiftly scuppered by mid-month COVID restrictions and lockdowns. Total like-for-like sales increased by +11.22% in the first week of December from a strong base of +22.40% for the same week last year, with both weeks including Cyber Monday. The second week of the month saw total like-for-like sales improve, as well, by +6.42% from a flat base (+0.28%) last year. With rising COVID cases and further restrictions announced, however, total like-for-like sales then tumbled by -11.15% in week three from a base of -0.37% for the same week last year. The final week of December, which saw the expansion of a more restrictive Tier system across England, saw total like-for-like sales plummet by -23.18%, but from a base of +6.61% for the same week last year.

Sector Results

Both the lifestyle and fashion sectors faltered this month, while homeware recorded its eighth consecutive positive result.

Christmas shopping couldn’t save lifestyle, as the sector recorded a decline of -5.4% in December from a hefty base of +12.9% for the same month last year. The result marks the ninth month of negative total like-for-like sales for lifestyle in 2020, plunging total lifestyle back into negative territory after two months of positive results.

Fashion total like-for-like sales also fell by -6.2% this month offsetting a base of +4.5% for December last year. December marked a sombre result for fashion: ten negative consecutive like-for-like sales results, despite recording two positive weeks to start the month.

Homeware, however, was the lone bright spot and total like-for-like sales improved by +29.3% in December from an already lofty base of +11.7% for the same month last year. This month’s result continued a strong run of positive results for total homeware, marking eight consecutive months of growth.

Non-store sales remained above the long-run average for the category as bricks and mortar shops closed mid-December. The result, however, marked the lowest total non-store like-for-like since March and couldn’t lift total like-for-like sales out of negative territory. Total non-store like-for-like sales increased by +62.0% in December from a base of +24.5% last year.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “Shoppers were ready to spend at the start of December, providing retailers with some much needed Christmas cash. This optimism was scuppered, however, as lockdowns returned across the country, dampening consumer sentiment, with discretionary spend following close behind.

“Early January spending figures suggest shoppers weren’t simply waiting for discounting, but instead stopping discretionary spend altogether as the nation hunkers down for a long winter lockdown. Unlike the November lockdown that had a finite ending with Christmas in sight, the current forecast remains much gloomier for retailers, as they try to hold on until the vaccination programme can reopen the economy, which may leave many with high levels of unsold winter stock.

“It is clear that there are retailers in urgent need of further support to survive this latest lockdown.  While there is no doubt that we will see more retail casualties, there will also be those that ride this storm and will find greater opportunities as discretionary spend returns and recovery begins.”

*BDO began recording total LFLs in September 2017

Source : BDO

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11 January 2021

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