Following a disappointing Golden Quarter, retailers had a strong start to the new year, as latest data shows rise in total UK retail sales volumes with a particular considerable rise in food stores sales volume, prompted by more people eating at home.
According to Office for National Statistics (ONS) retail sales figures for January released today (21), retail sales volumes are estimated to have risen by 1.7 per cent in January 2025, following a fall of 0.6 per cent in December 2024.
ONS figures show that food stores sales volumes rose by 5.6 per cent on the month. This is the largest rise since March 2020, putting index levels at their highest since June 2023.
This follows four consecutive falls on the month, ending in December 2024 when index levels were their lowest since April 2013.
Supermarkets, specialist food stores like butchers and bakers, and alcohol and tobacco stores all rose over the month. Retailers suggested that the increase was because of more people eating at home in January.
Non-store retailers' sales volumes rose 2.4 per cent on the month, partially rebounding from a 3.4 per cent fall in December 2024. Retailers in this sector reported post-Christmas sales remaining strong.
Non-food stores – the total of department, clothing, household and other non-food stores – fell 1.3 per cent over the month. Clothing retailers and household goods stores suggested the fall was because of reduced consumer confidence.
Commenting on the figures, Silvia Rindone, EY UK&I Retail Lead states, "January sales figures had a strong start to the new year, with total UK retail sales volumes estimated to have risen by 1.7 per cent month on month.
"Following a disappointing Golden Quarter, where sales struggled to gain momentum, the latest ONS data indicates a more stable foundation for retailers as they move into 2025.
“Food store sales volumes in particular saw robust growth in January 2025, recovering from declines in recent months. However, it is important to note that, more broadly, sales volumes fell by 0.6 per cent in the three months leading up to January 2025 compared to the three months ending in October 2024."
The EY ITEM Club Winter forecast predicts consumer spending will grow by 1.6 per cent, an improvement from the 1 per cent growth observed in 2024. However, the weaker-than-expected end to 2024 means retailers need to remain vigilant in their strategies, Rindone added.
“While macro trends such as growing consumer income in real terms and lower interest rates are positive news, the benefits are not being felt evenly across the retail landscape.
"Overall growth in the retail sector remains sluggish, masking a mix of both strong and poor performers within every retail sub-sector. Performance is highly variable and largely dependent on how well retailers have optimised their customer offerings—both digitally and physically—over recent years.
"Those who have not invested in their propositions are now struggling to find the space to invest further in increasingly challenging conditions."
Rindone calls on retailers to build a broader proposition that goes beyond selling products.
"Designing service offerings that effectively solve customer problems is one example of how they can foster loyalty and drive sales. Additionally, investing in strong brands that drive trust will be crucial for retailers looking to differentiate themselves in a competitive market.
“While January has brought a positive start to the year, the retail sector must remain agile and focused on customer-centric strategies to thrive amidst the anticipated economic challenges ahead.”
The retail association has expressed deep concern over the latest Office for National Statistics (ONS) data showing that the UK retail sector has lost nearly a quarter of a million jobs over the past five years.
The British Independent Retailers Association (Bira), which works with over 6,000 independent retailers across the UK, has highlighted the devastating impact these job losses are having on high streets nationwide.
The ONS figures reveal that as of December 2024, there were 2.88 million retail jobs in the UK, with the four-quarter average dropping to 2.84 million jobs. This represents a decline of 70,000 from the previous year and 249,000 fewer jobs than five years ago.
The data further highlights that full-time jobs have fallen by 106,000 and part-time roles by 142,000 compared to five years ago, painting a concerning picture for the sector that has traditionally been a significant employer across the UK.
Andrew Goodacre
Andrew Goodacre
"These alarming figures confirm what we've been hearing from our members across the country," said Andrew Goodacre, Bira CEO. "Independent retailers are facing unprecedented challenges, and this record number of job losses reflects the severe pressure on high streets throughout the UK. In the past year alone, we've seen over 14,000 independent shops close their doors permanently, with many more struggling to survive.
"The impact is felt most acutely in our town centres, where independent retailers have traditionally been the backbone of local economies. With a 14 per cent vacancy rate on high streets across the UK, we are witnessing the hollowing out of once-vibrant communities."
Bira is particularly concerned about the disproportionate impact on part-time jobs, which have seen the steepest decline. Part-time positions are crucial for many independent retailers who rely on flexible staffing models to manage costs while maintaining customer service levels.
Mr Goodacre added: "Independent retailers need meaningful support now more than ever. This isn't just about preserving jobs – it's about protecting the character and vitality of our high streets. We are calling on the government to implement an urgent review of business rates, provide targeted relief for small retailers, and develop a comprehensive strategy to revitalise town centres."
Bira's conversations with members indicate that retailers across the board are expressing significant concerns about their ability to maintain current staffing levels over the next 12 months, with rising operational costs cited as the primary challenge.
Convenience stores emerged as largest growing category in terms of store opening last year, a recent report has stated, showing overall decline in chain outlet closures with 2024 having the second fewest closures in a decade, reflecting an improving picture for retailers.
According to Store Opening and Closing Data 2024 by PwC, a total of 12,804 shops and outlets belonging to multiples and chains (those with five or more outlets) exited UK high streets, shopping centres and retail parks in 2024.
This is equivalent to 35 closures per day, a decrease from last year and the second fewest closures in a decade – closures were only lower in 2022.
Openings are following a similar trend, with numbers slowing slightly to 25 per day. This is an improvement from the number of store openings during the pandemic but lower than the 34 per day peak during the mid-2010s.
The fastest growing category this year was convenience stores, as large supermarket chains accelerated growth in the fastest growing store format in the UK grocery market.
In fact, the net growth of full-sized supermarkets slowed slightly from the previous year, as discounters in particular slowed down their roll out plans.
Coffee shops were the only other category with more than 1 net opening per week in 2024.
This category saw a continuation of openings out-of-town and in drive-thrus seen in previous years, as well as chains expanding into city centres as the pandemic working-from-home trend began to reverse.
When it comes to declining categories, half of all net closures are accounted for by four categories- chemists, pubs and bars, banks, and car-related outlets.
However, these net declines are generally smaller than those seen in previous years, reflecting the improving closure trend across the board, states the PwC report.
This year’s results show higher net closures in the South and East of the England, while Wales, Scotland and the North West have seen fewer net closures.
In line with last year’s results, retail parks have continued to grow in 2024, significantly outperforming other locations and maintaining the positive performance.
Encouragingly though, rates of decline have fallen across all other location types over the last year too. For instance, shopping centres have more than halved the number of closures in 2024, with their recovery being boosted by an increasing pivot to growing leisure categories.
Meanwhile even high streets have seen net closures decline by about a quarter compared with 2023.
This year’s data reinforces a continued move away from the high street, where slower openings that are unable to offset concentrated closures. In contrast, out-of-town locations are seeing fewer closures and a net increase in store openings.
The results for 2024 show improvement. Closures are stabilising with fewer one-off failures and restructurings leading to just 10 net closures per day, three less than in 2023.
However, long-run analysis does show the 2 per cent per annum decline in chain outlets is in-line with the wider trend of shopping and services continuing to move online, despite the stated preference of many younger consumers to shop in store.
The number of retail jobs in 2024 slumped to the lowest since the data began in 1996, despite total jobs in the economy continuing to rise, shows the latest report by the ONS,
there were 2.88m jobs in retail in December 2024.This is traditionally the high point of the year, with retailers employing more people during the key Christmas quarter. The four-quarter average was 2.84m jobs, 70,000 fewer than at the same point last year, and 249,000 fewer than five years ago.
On a four-quarter average there were 1.50m part-time and 1.34m full-time jobs. The number of full-time jobs is down 106,000 on five years ago. Meanwhile, the number of part-time jobs is down 142,000 on five years ago.
Commenting on these figures, Helen Dickinson, Chief Executive at the British Retail Consortium, said, “The number of retail jobs in 2024 was the lowest since the data began in 1996, despite total jobs in the economy continuing to rise. While this decline in retail jobs should be a concern to communities everywhere, worse could be yet to come.
"Last October’s Budget forced retailer wage bills up by over £5bn, and both the rise in employer NICs and increased National Living Wage have made hiring significantly more costly.
"A recent survey of retail Finance Directors showed that half were planning hiring freezes or cutting jobs, both in head offices and stores across the UK.
“Jobs cuts are likely to fall disproportionately on part-time roles. 200,000 part-time jobs have already been lost over the last seven years, and up to 160,000 more part-time roles are at risk in the next three years.
"This matters: flexible retail roles are an important stepping stone for many people, whether it’s a first job out of school or a part-time role for those returning to the workforce or with caring responsibilities.
"As the Government’s welfare reforms aim to increase the numbers in work, flexible retail roles offer a first rung back onto the career ladder.
“Retailers face uncertainty around the new Growth and Skills Levy and on implementation of the Employment Rights Bill which could make it more difficult to offer flexible part-time roles or retrain people.
"Reducing part-time and reskilling opportunities in retail would not only be a loss to the industry, the UK’s largest private sector employer, but would also punish the millions of people who benefit from flexible, local jobs.
"If Government can ensure these policies help, rather than hinder, recruitment and investment in training, the industry can help provide routes back into work for those who need it.
"Government must join the dots on these different policies to create a win-win for employees, employers, and the wider economy.”
Food and grocery spending expectations continued to outperform other categories this month, shows the recent industry data, reflecting the improved confidence in the shoppers.
According to BRC-Opinium data released today (20), consumer expectations over the next three months of the state of the economy improved slightly to -35 in March, up from -37 in February.
Expectation over their personal financial situation also improved slightly to -10 in March, up from -11 in February while for personal spending on retail rose to 0 in March, up from -5 in February.
Consumer expectation over their personal spending overall rose to +11 in March, up from +4 in February while that on their personal saving fell to -5 in March, down from -3 in February.
Helen Dickinson, Chief Executive of the British Retail Consortium, said, "Consumer confidence stabilised this month after February’s record low.
"This was coupled with an increase in spending expectations for the three months ahead, both for retail spending and spending more generally.
"Within retail, spending expectations for DIY and home improvements moved into positive territory for the first time. Across all categories, Gen Z (18-27) expected to spend more than the previous 3 months in every category, while Gen X (44-59) planned the biggest cuts to spending for most items, excluding food.
"Food and grocery spending expectations continued to outperform other categories, hitting a new high, though this could also be due to the expectation of rising prices.
“The Spring statement is an opportunity for government to inject some confidence back into the economy. In a matter of weeks, retailers grapple with the reality of billions in extra costs from the increases to employer National Insurance and the National Living Wage.
"This £5bn in new costs will give many no option but to push prices up. Food inflation is likely to hit 5 per cent by the end of the year, and with further costs from the new packaging tax and implementation of the Employment Rights Bill, prices risk being pushed up further.
"Without a much needed confidence boost from government, the scale of new costs will see retail investment fall further, holding back future growth in the economy.”
European-style fruit-led or fruity beer is increasingly gaining popularity in the UK, emerging as the Britain’s fastest growing beer trend.
According to Tesco, demand for these lighter thirst-quenching beers, which have a typical strength of around 4% ABV, is rocketing so much that the supermarket has seen sales volume grow by 250 per cent in the last year.
These fruity beer styles have long been popular in western European countries such as France, Germany, Belgium, Spain and Italy, and are associated with ‘after sport’ refreshment, particularly skiing and cycling.
Over the last 15 years, various European beers with fruity profiles have gradually become more popular over here such as Belgian strawberry brews Fruli and Bacchus Kriek, and more recently Radler, a shandy style beer from Germany and Damm Lemon from Spain.
Seven years ago, dedicated UK fruit lager brand Jubel was launched and quickly established themselves as one of the hippest beers for drinkers in the 21-35 age group.
The company now has five different varieties – peach, mango, blood orange, lemon and grapefruit - of its 4 per cent strength lager and has seen volume grow in Tesco by more than 300 per cent.
Tesco beer buyer Ben Cole said, “The soaring demand for fruit-led brews, particularly lager, has taken the UK drinks market by storm and is the biggest trend to hit the beer scene since the craft boom started more than 15 years ago.
“The trend actually has its roots in the craft beer movement because it introduced beers with tropical fruit profiles to more drinkers than ever before.
“For many people the craft movement changed the perception of what a beer could taste like and opened many drinkers’ palates to a wider range of styles.”
The trend is also similar to the fruit-led cider boom which began 20 years ago with the introduction of pear varieties.
That movement came after Magners reinvented cider as a refreshing drink to be enjoyed ‘over ice’ and within a few years other cider manufacturers such as Kopparberg were marketing fruit-led variants.
Jubel were the first UK company to exclusively take note of the fruit-led side of the beer market and formed in April 2018.
Founder Jesse Wilson got the idea for the company during a skiing trip to France where his group of friends found that the Bière Pêche being served – which included a shot of peach syrup – was light and refreshing.
Wilson said, “We were a mixed group of men and women, some of whom liked beer and some who didn’t, but we all loved the Bière Pêche being served – a pint of lager with a peach top – and it gave me the idea to start the brand.
“I thought that style of lager could be the perfectly refreshing pint in pubs and that’s where our business grew, with word of mouth spreading rapidly, to the point where it seems our flagship peach lager is now the fifth biggest craft beer in the on-trade based on CGA reported volumes.
“We are incredibly excited that retailers like Tesco see this as the biggest trend to hit beer since the craft beer movement, and we’re pumped to be pioneering it.”