BDO: Discounts Boost Retail Sales as January Growth Falls Flat

• Total like-for-like retail sales in-store and online grew by just +1.7% in January, significantly below rate of inflation
• High street sales grew by +4.7% driven by heavy discounting with online sales growing by just +0.7%

Total retail sales in discretionary categories (fashion, homewares and lifestyle) grew by just +1.7% in January, compared to the same month last year, according to the latest High Street Sales Tracker from accountancy and business advisory firm BDO. This is significantly below the rate of inflation, reflecting a fall in sales volumes compared to January 2025.

Following a very disappointing end to the Golden Quarter, when in-store sales fell by -0.5% in December, January saw sales on the high street grow by +4.7%, driven primarily by heavy discounting after Christmas and in the new year sales. This discounting propped up sales growth in the early part of the month, but total sales, in-store and online, fell in the final two weeks of January. The fashion sector recorded the strongest in-store performance across core discretionary categories, with sales up +7.6% compared to January 2025, and non-store sales also recorded positive growth, up +4.8% on the same month last year.

This set of results also marks the ninth time in the last twelve months that total sales grew below the rate of inflation, a reflection of long-term difficult trading conditions for the sector.

Sophie Michael, Head of Retail and Wholesale at BDO, commented: “On the surface these results might look like cause for cautious optimism: high street sales up above the rate of inflation, and total sales also ticking up. But looking closer, it’s clear that after a very disappointing Christmas, when sales fell online and in-store, the trading environment for retailers has hardly improved in the new year.

“We saw very high levels of discounting immediately after Christmas and the first week of January that has almost entirely driven the growth in sales recorded this month.

“Clearly, retailers were left with high levels of stock after disappointing sales in December with promotional activity reflecting their efforts to clear storerooms and shops for new and fresh lines to create essential cashflow. Unfortunately, this discounting is likely to erode paper-thin margins even further.”

“As February approaches, retailers are poised to tread carefully amidst an uncertain landscape for both consumers and businesses. The lack of clear direction regarding future economic conditions, coupled with the unsettling backdrop of rising unemployment and diminishing disposable income, presents a significant challenge.

“In such a climate, encouraging consumers to engage in discretionary spending will require substantial effort and strategic initiatives. Retailers must navigate these turbulent times with innovative approaches to stimulate consumer confidence and spending, while at the same time remaining nimble and agile enough to adapt to changing behaviours and further economic headwinds.”

Source : BDO

Image : Sampajano_Anizza / Shutterstock / 371945593

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