December disaster for UK retail as Omicron and inflation dent sales

By

Sandra Halliday

Published
Jan 21, 2022

Fears that UK retail sales would have been dented by the Omicron variant and inflation in December may have been dampened by a number of positive updates from individual companies. But on Friday, the Office for National Statistics issued its office retail sales figures and they were, indeed, fairly bleak.

The ONS said retail sales volumes slumped 3.7% in December and the value of the spend was down 3.1% compared to November. And volumes even fell 0.9% year-on-year, although the value of spending was 5.7% higher, suggesting inflation was having a big effect. 

Given that many Christmas celebrations had been cancelled due to Covid restrictions in late 2020, then 2021’s year-on-year dip looks even worse.

On the plus side, sales volumes were 2.6% higher than their pre-coronavirus February 2020 levels and the value of the spend was up 7.6%, although again, inflation would have been a major factor here.

That was about the only bright spot as non-food stores sales volumes fell by 7.1% in December 2021, with falls in each of its sub-sectors (department stores, clothing stores, other non-food stores and household stores) following strong sales in November. 

In fact, clothing stores and department stores reported a volume fall of 8% and 6.3%, respectively, over the month and were even 7.2% and 10.6% below levels in February 2020.   

Again, the Omicron variant, which spread rapidly during December, was reported by some retailers to be noticeably impacting retail footfall.

So it was no surprise that the proportion of retail sales online rose slightly to 26.6% in December, which was substantially higher than the 19.7% in February 2020 before the pandemic.

ParcelHero’s Head of Consumer Research, David Jinks, highlighted the dilemma retailers faced: “Overall, these figures show that the arrival of Omicron threw a spanner in the works for retailers’ recovery plans at the worst possible time of the year. As Brits became aware of how quickly Omicron was spreading, they abandoned the High Street but didn’t turn to online in massive numbers. 

"Why was this? As we already know, millions of canny shoppers had bought most of their presents in November to avoid Christmas delivery delays and crowded stores. It’s increasingly the pattern that November sales, including Black Friday and Cyber Monday, don’t boost retailers’ overall Christmas profits, they merely rob sales from December.”