December and 2017 spend drops in UK, fashion lags other sectors

We’ve heard a lot of words used to described UK retail in recent months - from tough to, weak, volatile and challenging. But ‘torrid’ was the word Visa chose as it released its December and full-year 2017 spending figures.

Price cuts couldn't propel December's sales higher in the UK

The company said that 2017 spending was the worst in half a decade, with means the last time the news was as bad was at the tail end of the global downturn when the UK was in the grip of austerity. 

So what about December 2017? Retail spending fell 1% year-on-year, which might not sound too bad but in the Christmas season, when consumers usually take the brakes off, it wasn’t good news. And given that inflation is over 3%, that 1% fall actually looks very, very bad. Additionally, fashion spend dropped 2.4%, much worse than the overall fall.

December’s spend also looked sluggish compared to November with a 2.6% month-on-month drop as the focus on Black Friday continued to irreversibly change everything we thought we knew about Britain’s Christmas shopping season.

Visa said that total spend has been down for seven of the last eight months and that meant the year’s sales fell 0.3% overall - as mentioned, that was the first drop since 2012. The previous four years had seen overall spending rising by 1.7% on average.

The year was also marked by e-tail’s relentless rise as it outstripped physical store spending in all but one month. And at least online helped rescue UK retail from a wipeout. In December, for instance, face-to-face sales fell 2.7% but e-tail rose 2%, although that was lower than its 2.4% expansion in November.

And it seems that there’s no upturn in sight with Annabel Fiddes, principal economist at IHS Market, which puts the report together with Visa, saying that despite price rises being set to slow down, spend isn’t likely to get back to 2016’s levels any time soon.

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