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UK retail sales plunge after Omicron spread

·3-min read
People wearing face masks on Oxford Street, in central London. Picture date: Monday January 10, 2022.
People wearing face masks on Oxford Street, in central London. Photo: PA

UK retail sales plummeted last month despite the holiday season, as fear of the Omicron variant kept people at home, impacting footfall.

Retail sales volumes fell by 3.7% in December 2021, the Office for National Statistics (ONS) said on Friday. Department stores, fashion chains, toy retailers and other non-food stores saw sales volumes fall by 7.1% while automotive fuel sales volumes fell by 4.7% amid increased home working and reduced travel.

Food store sales volumes fell by 1.0% in December 2021.

However, the proportion of retail sales online rose slightly to 26.6% in December 2021 from 26.3% in November, and were substantially higher than the 19.7% in February 2020 before the pandemic hit.

“After strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall," said ONS deputy director for surveys and economic indicators, Heather Bovill.

“However, despite the fall in December, retail sales are still stronger than before the pandemic, with over a quarter of sales now made online.”

Read more: UK consumer confidence falls amid inflation and interest rate concerns

“Omicron’s ominous arrival in December rudely interrupted the retail recovery party for high street stores,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

"As more shoppers stayed away, hunkering down for more muted celebrations at home, tills were quieter and volumes lower, offering very little Christmas cheer for retailers," she said, adding: "Searching for the latest styles fell out of fashion as events were cancelled and fear of catching the virus spread."

"But given that shoppers had already been out in force in October and November ticking off gifts from Christmas lists, fewer people it seemed had to make that last minute dash to the shops."

Paul Martin, UK head of retail at KPMG, said that although the spread of the Omicron variant had an impact on the final weeks of Christmas trading, December remained a broadly positive month with growth above pre-pandemic levels, albeit down on a very strong November which saw consumers shop early to secure the gifts they really wanted.

Looking ahead, he said strong consumer demand helped retailers offset rising cost challenges last year and they will be hoping that consumer confidence holds up in 2022, against a backdrop of rising household bills, inflation and an increasingly competitive landscape.

These household bills will include higher energy prices and National Insurance contributions in 2022, as both are set to rise.

"The remaining disposable income also faces greater competition from a resurgence in tourism, eating out, sport and live music," said Helen Dickinson, CEO of the British Retail Consortium.

"Rising inflation is reducing consumer demand while increasing the costs for businesses. Retailers face rising wage bills, increased transport costs, and increased checks and documentation as a result of new import controls, all of which are forcing up prices at the checkout.”

Watch: How to save money on a low income