Shoppers shrug off omicron concerns as retailers record strong December sales growth

The report for December shows that sales grew throughout “Golden Quarter” despite supply chain issues and stock shortages and the rapid growth in COVID-19 cases caused by the omicron variant did little to dampen consumer enthusiasm for Christmas shopping.

According to BDO’s High Street Sales Tracker (HSST), total like-for-like sales, combined in-store and online, increased by +21.4 per cent in December from a base of -1.6 per cent for the equivalent month in 2020. Total non-store like-for-like sales increased by just 7.6 per cent, compared to an increase of 62 per cent in December 2020.

However, this lower level of growth compared to last year reflects a reallocation of consumer spending from online channels – the only channels available during lockdown in 2020 – back to the high street.

In-store like-for-like sales saw substantial increases across all categories compared to December 2020. Despite slightly slower growth in the second and third weeks of the month, when concerns around the omicron variant started to increase, the sector finished the month with an exceptionally strong week, with like-for-like sales up +60.9 per cent. 

Fashion saw the biggest growth with total like-for-like sales increasing by +26.3 per cent for the month, from a base of -6.2 per cent for the same time last year. The sector has maintained consistently strong growth throughout the “Golden Quarter” (October, November and December), reflecting pent-up demand for winter clothing that consumers held off purchasing last year as they anticipated future lockdowns.

Total like-for-like sales in the lifestyle sector increased by +27.9 per cent in December, from a base of -5.4 per cent for the equivalent month last year. This is the 10th month of positive total like-for-like sales for the lifestyle sector, which saw growth hit +91.4 per cent in the week leading into Christmas.

Homeware total like-for-like sales rose by just +7.4 per cent in December, from a strong base of +29.3 per cent the same month last year. While levels of growth in the homeware category have not always been consistent, this is the 20th consecutive month of positive like-for-like homeware sales.  

Sophie Michael, head of retail and wholesale at BDO LLP, said after almost two years of operating in this environment, retailers have developed significant capacity for resilience and adaptation that ensure they can continue to operate successfully in challenging trading conditions.

“However, this strong performance depends on consumers maintaining high levels of spending while facing further headwinds of inflation, rising energy bills and potential increases to interest rates,” she said.

“The uplift in the National Living Wage and National Insurance, as well as rising energy costs, will also put serious pressure on retailers’ bottom lines. Retailers may find they struggle to attract consumer spending and to maintain low prices, particularly in fashion and footwear, as these pressures intensify this year. 

“Retailers will now need to reinforce the resilience they have developed over the past two years if they are to survive further shocks to the system and see the strong growth of 2021 continue in 2022.”