Discounting has become increasingly important for driving consumer spending, with high street retailers experiencing a lacklustre month during the critical golden quarter before a substantial increase in sales the week of Black Friday, figures released today by accountancy and business advisory firm BDO LLP reveal.
According to BDO’s High Street Sales Tracker (HSST), in-store sales declined by -1.9% year-on-year in November* from an already negative base of -2.6%.
In the week leading up to Black Friday, consumers held back on their spending resulting in a dramatic decline for in-store like-for-like (LFL) sales of -17.14% - one of the worst weekly results since the ‘Beast from the East’ hit Britain in March 2018.
Shoppers curtailed online spending too. Non-store like-for-like sales managed only a small increase of +2.8% in November from a base of +18.2% last year. The result marked the slowest monthly growth for non-store LFLs since BDO began recording for the category in 2010.
But the week of Black Friday** provided retailers with a much-needed boost. According to BDO’s figures, in-store and non-store sales soared by +24.05% and +28.10% respectively.
Sophie Michael, Head of Retail and Wholesale at BDO, explains: “The figures for November are difficult to interpret as a late Black Friday means year-on-year comparisons are not straight forward.
“If we adjust for the impact of Black Friday in 2019, the overall results for November were more respectable with in-store sales jumping by approximately +3% and non-store sales climbing by around +8% year-on-year.
“What is abundantly clear, however, is just how important the promotional event and heavy discounting have become to the high street. Shoppers simply weren’t willing to part with their pounds until hefty price-cuts took place, as the steep decline the week before Black Friday illustrates.”
BDO says retailers made better use of the event to promote in-store sales this year, however they will be worried about the high margins they needed to give away in order to lure consumers to spend.
In addition, orders placed with suppliers have declined for seven months running, according to BDO, suggesting that retailers are concerned about the immediate future. Part of the concern will be around consumer spending, or lack thereof.
Sophie Michael adds: “Last year marked the sixth successive December of negative sales growth. Given the poor performance of UK retail for the year and the distressing dependence on steep discounting, retailers will be desperately hoping that this December won’t prove, yet again, to be another disastrous month of Christmas trading.”
Lifestyle and fashion sales suffer before Black Friday
According to BDO’s High Street Sales Tracker, the lifestyle sector continued its disastrous streak, with in-store like-for-like sales falling by -5.2% in November from a similarly dire base of -4.8% last year. The result marked 22 months of no growth for the category and the second worst monthly result of the year.
Fashion in-store sales also declined by -0.5% for November from a poor base of -1.7%. Despite recording three weeks of positive LFLs to begin the month, a final week slump led to the fifth month of negative LFLs for in-store fashion in the year-to-date.
Bucking the trend in November was homeware in-store sales, which increased by +2.1% from a base of -0.4%. This is the third consecutive month of positive like-for-like in-store sales for the sector.
* November sales comprise the four weeks to week ending 24/11/19.
** Black Friday week fell one week later than usual this year and is therefore not directly comparable with sales for Black Friday week in 2018. Including the results of Black Friday week in the November 2019 figures would have resulted in an additional week being counted compared to last year. This is why they have been reported separately.
Note to editors
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high growth businesses that fuel the economy.
We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.
BDO LLP operates in 17 offices across the UK, employing 5,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO International network.
BDO’s global network
The BDO global network provides business advisory services in 167 countries, with 88,000 people working out of 1,800 offices worldwide. It has revenues of $9.6bn.
Ells Baker or Erin Dodds
Tel: +44(0)20 7758 3900
Email: [email protected]