Over the festive period, many retailers enjoyed a boost in sales, with the fastest growth since 2015. This is largely due to Christmas sales and the increasingly popular Black Friday week, where prices are slashed by many retailers. Although many retailers experienced a surge in sales over the festive period, January has been largely disappointing for UK retailers.
The month of January is notoriously financially stressful, as many consumers overspend in December and eagerly wait for pay day to arrive at the end of January. As a result, retailers often suffer from the drought in spending, however the start of 2017 has been more disappointing than usual for retailers. There has not been such a decline in this month since 1983, although this could be a result of extra spending in the lead up to and over the festive period. The Confederation of British Industry has reported that there has been a fall of 35 to -8 points during January; a decline which was a far cry from the estimated 22 points. It seems that food sales have declined and this has largely contributed to the overall results for retailers in January.
Downturn in sales for Next
One example of a successful company who have reported a drop in sales for January are fashion and clothing retailer, Next. With December sales falling by 0.4%, the retail company has reduced its forecast for sales to the end of January. Next have reported an overall decrease in sales of 1.5% for the year and they are not the only retailers to suffer. Other fashion retailers, including Marks and Spencer, Debenhams and Burberry have also reported a decline in shares at the beginning of January.
The good news for retailers is that this decline in sales is unlikely to continue throughout the rest of the year. Reports have shown that sales have not slowed down after the Brexit vote, which is good news for retailers. However, as it is difficult to predict the actual financial consequences of leaving the EU, economists don’t really know how consumers will react and whether they will spend their way out of it or tighten the purse strings. The next few months will be crucial for retailers as this is the time when consumers usually return to their normal spending habits. It will be interesting to see what the remainder of 2017 has in store for retailers and what plans they have in place to cope with a potential spending downturn.