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.”
