- Pub volumes up on England's World Cup run
- Grocery prices fall back as buyers trade down
The Fifa World Cup has provided a temporary boost to pub sales as punters head to the boozers to watch the Three Lions in action, but the outlook for Christmas retail and hospitality sales is a downbeat one according to the latest data.
The British Beer and Pub Association said that mid-week World Cup games have provided more of a boon than it expected: it estimates that England’s knockout match against Senegal has given the industry a £22mn sales headwind through 5mn extra pints being sold, compared with a regular Sunday.
The industry body’s chief executive, Emma McClarkin, said that “the tournament has been filling up pubs on days that otherwise might be quieter, and we’re hoping that trend continues in the next couple of weeks”.
This bullishness was backed up evidence from pub operator Marston’s (MARS) this week, which said in its full-year results announcement that like-for-like drink sales were up by more than 50 per cent against last year on the days of England’s World Cup games. But this is an outlier in the consumer spending space.
The latest retail sales update from the British Retail Consortium (BRC) and KPMG paints a more concerning picture for the sector due to the impact of soaring prices.
Their data showed that total UK retail sales were up by 4.2 per cent in November against last year, as Black Friday trading got the ball rolling for festive shopping and consumers picked up heat-related items such as coats and hot water bottles and took advantage of home furnishings discounts. In the US, Amazon (US:AMZN) said that the period from Thanksgiving to Cyber Monday (24-28 November) this year represented “a record-breaking holiday shopping weekend” for the company.
The UK November sales performance was better than the 1.6 per cent year-on-year growth recorded in October. However, as the figures are not adjusted for inflation, the data confirms that volumes have fallen significantly given that consumer price index inflation in October reached a 41-year high of 11.1 per cent. And in a worrying sign for non-food retailers, total sales were flat for the three months to November.
Analysts at investment bank Stifel said that “the key concern for retailers will be how much of the strong [Black Friday] weekend performance was pull-forward Christmas spend, with cash-strapped consumers taking advantage of deals with a plan to cut back on spend in December”.
It has been another challenging year for the retail and hospitality sector, with recovery from the pandemic stymied by the cost of living crisis and its impact on consumer demand. Companies are struggling with big increases in return rates, which has been highlighted by stocks such as Boohoo (BOO).
Difficult trading conditions have been demonstrated by a raft of profit warnings and several retailers falling into administration. Home furniture website Made.com and premier clothing retailer Joules have been two high-profile casualties, and analysts expect more to come.
KPMG UK head of retail Paul Martin warned that “for some struggling retailers hit hard as consumer confidence and spending declines, and costs continue to rise, the next few weeks could be critical to their survival”, while Stifel said that “we will see a rise in liquidations post Christmas for retailers where the golden quarter fails to deliver”.
Next (NEXT), which bought Made.com’s brands and intellectual property in November for only £3.4mn and last week confirmed it had taken a 74 per cent equity stake in Joules, has already flagged that it expects poor Christmas trading. The retailer has forecast a 2 per cent fall in sales for its fourth quarter to the end of January.
In better news for the sector, grocery price inflation fell for the first time in 21 months, albeit only slightly. Data analytics group Kantar said that prices were down by 0.1 percentage points in November, with the inflation rate falling back to 14.6 per cent. At the same time, customers have been trading down to cheaper and own-brand alternatives as a means of saving money at the tills, something which has been flagged by Tesco (TSCO). Aldi and Lidl have seen their sales grow by 25 per cent and 22 per cent, respectively, against last year, according to Kantar.
Such trends don’t bode well for listed retailers' Christmas trading hopes.
BRC chief executive Helen Dickinson said that “the cost of living crisis means many families might dial back their festive plans”. This seems a reasonable position to take given the evidence, with stubbornly high inflation cancelling out retail sales uplifts, and that will be a headwind for companies.
