The Golden Quarter, a highly anticipated period for retailers, witnessed a notable setback this year, with BDO reporting a substantial decline in December sales, marking it as the «worst performance» since 2017. Fashion retailers, in particular, were severely impacted, prompting concerns within the retail sector.
BDO, a leading consultancy and data company, underscores the significance of Golden Quarter sales, typically viewed as a crucial period to «boost profits and provide capital for retailers’ investment.»
Sophie Michael, Head of Retail and Wholesale at BDO, expresses apprehensions, stating, «There is a real risk of more store closures and retailer struggles in 2024, as consumers gravitate towards those offering better in-store or online experiences, diverse product ranges, or competitive pricing.»
So, what contributed to this downturn? The fashion sector bore the brunt of the poor performance leading up to Christmas, as per BDO’s High Street Sales Tracker. Fashion sales witnessed a sharp 6.1% decline compared to 2022, with in-store sales plummeting even further by 7.5%.
While the lifestyle and homewares sectors experienced less severe declines of 0.2% and -1.6%, respectively, the overall sales figure (combining fashion, lifestyle, and homewares) saw a notable dip of 2.7% compared to 2022.
Highlighting the severity of the situation, BDO’s Michael emphasized that 2023 marked «only the third year on record with negative in-store sales in each of the three months leading up to Christmas,» a situation previously observed in 2015. She added, «Considering the persistently high inflation, the gravity of these results should not be underestimated.»
BDO noted that the month started on a negative note, with a 3.49% drop in sales in the first week, and the situation worsened with discretionary categories witnessing a 6.25% decline in the second week and a 4.49% fall in the third week.
Despite a slight uptick in the week leading up to Christmas Eve, sales took another hit in the final week of December, falling by 3.58% compared to the same period last year.
Michael concluded, «This concerning set of results implies that retailers have failed to generate the much-needed revenues in the critical period, leaving them with relatively high seasonal stock levels as they enter the new year. This will undoubtedly impact their already squeezed margins and their ability to generate cash for future investment. In contrast, supermarkets have reported strong Christmas performances, indicating a shift in consumer discretionary spending towards food rather than new outfits or gifts. This poses significant concern for retailers relying heavily on discretionary spend.
