High streets risk further “casualties” amid disappointing early Christmas sales, retailers warn.
A flurry of Black Friday deals has failed to reinvigorate spending, with shoppers spending only 2.7pc more in November than a year earlier, according to the BRC-KPMG retail sales monitor.
While inflation figures for the month are not yet available, they will likely be far higher.
Paul Martin, UK head of retail at KPMG, said the sluggish spending in the run-up to Christmas spelt trouble ahead both for high streets and online retailers.
Mr Martin said: “With two of the three months of the crucial golden quarter seeing sales growth below 3pc, it has already been a weak Christmas trading period. As we look to the first few months of 2024, we can expect the challenges to continue which could lead to further casualties in the sector.”
Shoppers spent 1.6pc less on goods excluding foods in the three months to November, with spending down most sharply among online retailers at 2.1pc.
However, the gloom could prove good news for shoppers, as struggling retailers may be forced to offer big discounts to shift stock.
Mr Martin said: “Any excess stock not sold before Christmas could be further reduced leading to big January sales, and potentially having an even greater impact on already tight margins.”
He added: “Price remains the main purchasing driver, so we are likely to see a prolonged and well-targeted period of discounting.”
The research showed that shoppers were spending far less on things like jewellery and watches, suggesting there will be fewer lavish gifts under the trees this year.
But Helena Dickinson, the chief executive of the British Retail Consortium, warned that retailers faced mounting pressures in the new year.
Ms Dickinson said: “Retailers will have to shoulder many new cost pressures, including a rise to business rates, as well as costs from other new regulations. These combined with the biggest rise on record to the National Living Wage will mean retailers will have less capital to invest in lowering prices for their customers.”
The minimum wage will rise by 9.8pc to £11.44, in the largest-ever cash increase.
Employers have warned that the uplift risks pushing up unemployment, as businesses already under pressure from 15-year-high interest rates and depressed spending are faced with difficult choices.
It comes as separate figures from Barclaycard showed that spending on takeaways and subscriptions rose by respectively 6.1pc and 5.8pc in November amid bad weather and still high inflation.