On the 15th of December, just days after the government’s “Plan B” announcement, I wrote that the importance of the impact on the last full trading weekend before Christmas really could not be understated. I speculated that weakened retailers were facing the potential for more failures in the New Year, and that city workers were likely to abandon their offices until the New Year.
Admittedly, I wasn’t radically challenging the status quo at the time, but with figures now landing which show just how devasting this “lost Christmas” was for the Capital’s retail and leisure sector, I certainly feel we called it right. Not that I take any pleasure in the pain behind the figures, of course – the situation for many is bleak. And despite some jaundiced perceptions of our industry out there, a good Insolvency Practitioner always wants good businesses to survive and thrive.
So just how bad was it? The ONS figures are showing retail suffering its worst December slump since records began (in 1996). The 3.7% month-on-month decline was definitely exacerbated by a stronger than expected November (when shoppers were clearly intent on early Christmas shopping), but even without this mitigation it was devastatingly worse than the 0.6% drop which was the consensus estimate. Indeed, this represents the biggest fall since January 2021, when were put into a much tougher new lockdown.
The year-on-year picture was similarly grim. Fashion stores were hit the hardest, registering 8% declines, with apartment stores also experiencing 6.3% falls. Food store volumes fared better, albeit still in negative territory, down 1%, as part of an overall 0.9% fall year-on-year for all UK retail sales.
So with Plan B now being brushed aside, and the government telling us we are all going to have to “learn to live with Covid”, should we expect a swift reversion to the norm? I’m afraid I’m not yet ready to don those rose-tinted spectacles. Omicron might soon happily be in the rear-view mirror, but the warning lights are already flashing for the cost-of-living crisis, and its impact on consumer confidence. The combination of supply and labour chain shocks, energy and raw material price inflation, and April’s planned NI increase make me nervous. Furthermore, a more hawkish tone from the Bank of England could put yet more squeezes on the pockets of the nation’s mortgage holders into the Spring and beyond.
As the plain-speaking Rudge says in ‘The History Boys’ (Alan Bennett’s excellent play) – “History, it’s just one thing after another”. Well, it certainly feels like one thing after another for our beleaguered retailers at the moment.
And this time, I’d be happy to be wrong.
The warning lights are already flashing for the cost-of-living crisis, and its impact on consumer confidence