BDO's latest report indicates that discretionary retail sales experienced growth of +7.1% in January, contrasting with a decline of -0.8% in January 2024. This increase was predominantly fueled by a substantial rise in online sales (+15.5%) while bricks and mortar stores saw only a modest gain of +3.2%. Despite this uptick, the retail sector continues to face challenges, including rising costs and disappointing sales performance in 2024, suggesting that 2025 may still pose difficulties for retailers. Key categories such as fashion and homewares had marginal improvements following poor previous performances, hinting at the ongoing struggles in high street retail.
"These results may seem positive on the surface, but the underlying numbers show that the weak growth in the run up to Christmas has continued into the new year."
"While many retailers may have seen a rise in sales through the release of some of the pent-up consumer spending that didn't come through before Christmas, January trading for discretionary spend requires heavy encouragement through discounting; this delayed spending will no doubt have a significant impact on already thin margins."
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