“Now is not the winter of our discontent,” says Parcelhero’s David Jinks

Kristina Tripkovic on Unsplash

Latest ONS figures reveal the past few months haven’t been as dire for fashion retailers as previously predicted

“New data from the Office for National Statistics (ONS) reveals that Brits spent significantly more than they planned to this Christmas and that consumer spending has held up well this winter.

“The new ONS report on how discretionary spending has been affected in recent winters (between 2019 and now) contains some significant surprises. Fundamentally, it seems that now is not the winter of our discontent. It looks as if consumer spending has been just as robust as it was both pre-pandemic and before the sharp rise in inflation and household energy bills. Shoppers may have said that they were going to spend less but, in fact, they ended up spending around the same amount as in previous winters.

“This report dispels some of the myths that have already formed around this year’s Christmas trading. It finds no evidence we abandoned upmarket supermarkets for discount stores. It also reveals that postal strikes had little impact on online sales; high street sales didn’t peak until 22 December, following the pattern of previous years.

David Jinks

“Contrary to previous claims, the rail strikes also had little impact on high street spending. Likewise, there was virtually no sales boom or bust around the World Cup, despite many stores’ expectations or fears. Again, contrary to earlier reports, spending was higher on Black Friday and Boxing Day this winter compared to last. Finally, there was good news for the UK’s beleaguered fashion stores. Clothing and footwear sales, both in-store and online, were significantly stronger than many retailers had feared.

“Why are these latest results significantly better than many retailers and analysts had been expecting? Firstly, it looks like shoppers didn’t stick to their spending resolutions! In early December, 60 per cent of shoppers told the ONS that they planned to cut back on the amount of money they spent over Christmas, compared with the previous year. 79 per cent of shoppers said they would buy fewer presents and 73 per cent said they would be buying less expensive presents. In reality, card spending figures from Revolut (the main source of data for the ONS report) suggest that consumer spending was more resilient than expected, despite the negative pre-Christmas sentiment.

“Clothing and footwear sales benefitted from this uptick. This winter, to the relief of many retailers, consumers spent more on clothing and footwear than in previous festive periods. Of course, this is partly a result of rising prices. The average inflation rate between November 2022 to January 2023 was 6.7 per cent for clothing and footwear. This didn’t put off shoppers, though. Compared to 2021, November and December 2022 fashion sales increased by 1.1 per cent and 1.0 per cent respectively. 

“Recent reports have suggested that, faced with rocketing prices, many shoppers ditched upmarket supermarkets for cheaper chains this winter. Despite a 16.8 per cent rise in the price of food and non-alcoholic beverages in the year to January 2023, the report reveals there was only a small degree of “trading down” by shopping at less expensive supermarkets. Confirming separate data from the Bank of England, it looks as if shoppers preferred swapping to lower price goods within the same supermarket. This tallies with separate data from Kantar, which reveals there was only a small change in market share benefitting the budget supermarkets. Previously, 62 per cent of shoppers claimed they would be buying less expensive food and drink.

“Football fever for the first-ever winter FIFA World Cup started on 20 November, with the final played on 18 December. Some retailers forecast a boom in sales, particularly of food and drink, as Brits partied through the matches; others feared it would distract shoppers and slow spending. In fact, December 2022 saw levels and timing of spending on food and drink similar to previous winters. On 18 December 2022, the day of the World Cup final, there was no rise in spending on food and drink.

“Finally, reports of the death of online sales this Christmas were premature, if not plain wrong. Industrial action in the traditional postal sector led to unexpected pressures on the leading couriers, as consumers and stores scrabbled to find alternative services. With one of the strikes timed for Black Friday itself (25 November) consumers were expected to do more of their Christmas shopping on the high street. It appears this wasn’t the case, as in-store spending remained flat between 25 November and 18 December.

“Shoppers only rushed into shops and significantly increased their in-store spending on 22 December. At this point, as ParcelHero continually reminds everyone, deliveries in time for Christmas Day always become either more expensive or riskier.

“So, is this ONS report the last word on Christmas 2022? One word of warning before we take its findings as gospel: the data was obtained in collaboration with Revolut. Revolut is a newer source of spending data, and its users are typically younger and more metropolitan than the population as a whole. Therefore, its data is not necessarily representative of overall UK consumer spending trends.

“What is certain is that, as retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph in a post-Covid world. ParcelHero’s influential report 2030: Death of the High Street has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the high street as we know it will reach a dead-end by 2030.” Read the full report here.

David Jinks is head of consumer research at online delivery service Parcelhero