(Updated February 2022)
We cannot compare like with like. The year 2021 was very different from the previous year. Most of the first part of 2021 was spent in Lockdown, from which there was a very slow exit during summer. Hospitality was badly affected and face masks had to be worn in all shops. Towards the end of the year, a new Coronavirus variant, Omicron, was rapidly gaining ground, making many shoppers anxious (again) about visiting large retail premises or travelling to shop, stay and enjoy large cities like London, Manchester, Edinburgh or Birmingham.
However the UK government kept its nerve and refused to subject the country to further Lockdowns, unlike its policy in 2020. Hence, although there was some anxiety, people were able to shop for Christmas, visit relatives and have a few people around for celebrations very much like a normal Christmas. This was less true of the devolved regions, which maintained restrictions on retail and hospitality and had a more subdued Christmas break.
In Christmas 2021, retail sales rose by 7.3% compared to 2020 and the overall sales total even exceeded 2019's results by £2billion.
Definition. We define Christmas as the period from mid-November to the end of December, including the Boxing Day Sales period. Other analysts use different definitions. The ONS does not report specifically on Christmas.
What is Retail Spending? We define retail spending as: Retail sales = Store sales + Online sales. This means sales made in shops (physical stores) plus sales made online.
Shortages anticipated. Many retailers and suppliers had warned over summer that Christmas was going to be a problem in the UK. Shortages of capacity and logistical problems in a world waking up from covid meant that many toys and gifts would only be available in smaller than normal quantities, there might be food shortages, shortages of turkeys etc etc, so shoppers should not wait till the last moment before buying their Christmas presents, alcohol, clothes, table decorations or Christmas lights. Well there were shortages, particularly of IT devices and game equipment, but nothing like what had been feared. A few retailers commissioned their own ships to bring in imports. Was this comparatively benign result evidence of radical planning and well-informed consumers or of a conspiracy against the public? The supply situation certainly did look dire in summer. Retailers hit by Lockdowns and the race to online had no intention of ordering too many goods for Christmas. And many clever minds were set to ensuring that the goods retailers ordered ended up in the right place at the right time.
Retailers start planning their Christmas from around February/March and usually place their orders in this period as well. With the experience of the 2020 disaster they had no way of knowing whether their stores would be closed in the run-up to Christmas, shut during Christmas or closed for the post-Christmas sales when they traditionally get rid of a lot of old stock. Most non-food stores were Locked-down for the first half of the year. Planning for an unknown world like that required cold determination.
Normally foreign tourists provide additional spending over Christmas for retailers based in Central London, but it was unlikely that many of these would be back for Christmas 2021.
Christmas 2021: Outcomes
Table 1 (below) shows growth in sales at Christmas each year since 2018. Last year (2020) was a dreadful year for shops, with Christmas sales falling by -4.2% compared to the previous year. Although 2021 turned a spectacular +7.3% growth rate, when allowances are made for inflation Christmas sales were a little below those of 2019 and 2018.
UK Retail Sales Growth in Cash Terms Each Christmas*
Sales Growth Christmas period
Christmas is defined here as the period from mid-November to the end of December. Percentages are in cash terms (ie not allowing for inflation) and not seasonally adjusted. The figures are based on sales through physical stores plus sales made online,
The Online Christmas 2021
Online spending at Christmas, which rose by +46.3% in Christmas 2020 went into reverse in 2021 (with no Lockdowns over the Christmas period) and fell by -7.0% in 2021. However the aggregate total of online sales in Christmas 2021, at £17.618bn, was still +36.1% higher than online Christmas sales in 2019. Online sellers achieved an overall share of UK retailing of 28.4% during the 2021 Christmas season. In the previous year, spurred on by covid, 32.7% of Christmas sales were done online.
The total online sales given here include those made by multi-channel retailers, such as Next, John Lewis, Tesco and Sainsbury’s, as well as pure play retailers like Amazon, ASOS and BooHoo.
Christmas 2021 Offline (Physical Stores)
Bricks-and-mortar stores had a tough Christmas in 2020, when their sales fell by as much as -18.0%. In 2021 with zero Christmas Lockdowns, sales through bricks-and-mortar stores rose by +14.2%, although they were still £3bn below those of 2019, at £44.382bn. Since 2019, bricks-and-mortar stores have lost total retail market share of 6.9% to online retailers.
Changing Patterns of Sales: Christmas 2021
Better performers at Christmas 2021. Although online sales were down compared to 2020, they were still massively higher compared to 2019. Local stores did well, as did pharmacies, booksellers and newspapers retailers, and specialist shops selling alcohol and tobacco. Unlike 2020, this year retailers of computers and telecommunications devices had a good Christmas.
- Food (supermarkets and convenience stores). This category was stable compared to last year, although many food businesses have done well. The sales of large food retailers on aggregate rose by +1.5%, but the largest multiples have generally reported much faster rates of growth. There is only so much food and drink consumption that can be made over Christmas by families.
- Sales in Small Food Stores. As a result of the pandemic, many shoppers stayed close to home and many small stores near residential areas have had a new lease of life. Sales of smaller specialist foodshops and convenience stores rose over Christmas 2020 by +2.6% and by as much as 15.7% in Christmas 2021. This suggests that many shoppers turned to local shops to get their final food and alcohol purchased ready for Christmas Day.
- Non-food stores flourished in Christmas 2021, because there were no restrictions. In 2020, non-food sales fell by -6.3% over Christmas, but in Christmas 2021 non-food sales rose by 9.6% to reach £36.8bn.
- Department Stores. Department stores generally had a poor Christmas (some were closing down) and sales fell against 2020 by -3.1%,
- Household goods: in 2020, after spending several months trapped in their homes, with their loved ones, many people splashed out on furniture, hardware, paints, and household goods with overal sales rising +11.4% over Christmas 2020. This reflected, perhaps, a sudden interest in revamping life at home plus plenty of time for doing so. However sales of these products were marginally down in 2021 (by -0.2%).
- Pharmacy, cosmetics and toilet goods: although required masking may have reduced the use of cosmetics, demand rose by +5.9% in November 2021 and +13.0% in December.
- Books, news, periodicals: remember when books were supposed to disappear completely. Well they didn't. I wrote a report about five years ago, arguing that people will still want books: it was suppressed. Books and news sales rose by 32.1% in November 2021 and +1.3% in December.
- Computers & telecommunications equipment: sales of computers and telecomms fell in Christmas 2020, possibly because working from home and the family being at home more meant that households had already got all the IT equipment they needed. This Christmas sales were up +22.3% in November and +14.0% in December.
- Retailers of alcohol and tobacco: sales increased by +43.5% in November and +4.2% in December over 2020.
Major losers included: bricks-and-mortar retailers, many large-scale retailers, non-food and clothing. In particular:
- Clothing: over Christmas 2021, clothing did relatively well, although still hit by working from home and the paucity of evening entertainment requiring new clothes. Sales had fallen by -20.8% in Christmas 2020, but rose +20.2% over Christmas 2021. However, clothing sales were still 8% lower than those in 2018, although the situation is less bad than last year.
Black Friday (BF)
Black Friday is now a major promotional feature of Christmas. Many retailers hate it. This year we have not collected specific BF data, but our impressions are that the event was solid but the vast increases in annual BF sales are no longer achieved. So many retailers have turned BF into a two- or three-week permanent discount period that the concept has lost much of its meaning.
Boxing Day Sales
In 2020, the sudden closure of many large stores on Boxing Day and subsequent days cut revenue from The Sales by -36.6% compared to 2019 in bricks-and-mortar stores. This was not the case this year, but there were fewer customers than normal for The Sales and overall revenues were down around 18% compared to 2019.