UK retailers, restaurants and nightclubs are braced for a tough run-up to Christmas as poor weather and strikes hinder shopping and socialising.
The number of visitors to UK high streets was down by a fifth on pre-pandemic levels last week, and almost 1% down on last year when the Omicron variant and some government restrictions led to a very quiet end of the year, according to the latest data from the shopper tracking agency Springboard.
Despite the men’s football World Cup final, pubs, restaurants and bars experienced a 50% fall in takings this weekend, according to the Night Time Industries Association (NTIA), on what should have been one of the busiest weekends of the year.
Michael Kill, the chief executive of the NTIA, said the industry had lost out on an estimated £2bn of revenue as a result of rail strikes creating a situation that was “untenable for businesses”.
He called on the government to provide further support or risk “a huge swathe of businesses going into insolvency in January”.
Towns and London office locations fared the worst last week, as a cold snap and strikes combined to keep people at home. Central London and regional cities bounced back from last year – with visitor numbers up almost 9% – but were still about a fifth down on pre-pandemic levels, according to Springboard.
Diane Wehrle, the insights director at Springboard, said: “Last week – the week prior to Christmas – should have been a peak trading week for retail destinations and stores, with footfall expected to rise from the week before as Christmas shopping moves towards its zenith. Instead, footfall across UK retail destinations took a tumble last week.
“While the cold weather prevailed, which would undoubtedly have had some impact, the contrast with the results for the week before clearly demonstrate that it was the rail strikes that were the key impact on footfall.”
UK retailers have already reported lower sales than expected in the lead-up to Christmas. On Friday, figures from the Office for National Statistics showed that the amount spent on retail in Great Britain dropped by 0.4% in November, against a forecast by industry analysts of a 0.3% rise.
The boss of one big national retailer said, with heavy irony, that the “potentially lethal” combination of snow and strikes had “perfect timing”. “Around about now is the point that customers switch from e-commerce to stores, and the next [few] days are usually much more about the store experience,” he said.
The prospects for an acceleration in sales during December to make up for lost ground are being hindered by the cold snap and a series of rail strikes. There are further strikes planned, including one by Network Rail staff starting on Christmas Eve, when passenger trains will finish by 3pm.
Some online retailers are also likely to be affected by strikes, with 115,000 Royal Mail workers due to start a two-day strike over pay, jobs and conditions on Friday, running over to Christmas Eve.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, a consultancy, said the November sales decline came as “consumers tightened their belts in the face of surging prices”.
“We expect further weakness ahead due to the snow and a further hit to real incomes,” he added, with higher energy costs an important factor in reducing households’ disposable incomes.
Amarveer Singh and Maria Nurgaziyeva, analysts at CreditSights, a debt rating agency, wrote: “December should see more support from Christmas shopping for both food and non-food retailing, although cold weather and ongoing rail strikes are expected to put a dent into it.”
Inflation has meant that consumers are getting less for their money. Singh and Nurgaziyeva said November sales by value in pounds were up by 14% compared with February 2020 – before the first UK pandemic lockdowns – but the volume of goods sold was 0.7% lower.
