UK retailers are facing significant distress following disappointing Boxing Day sales, with footfall down 4.9% across all retail destinations compared to last year. The decline marks the first recorded drop since before the pandemic, casting shadows over what used to be one of the busiest shopping days of the year.
Data from MRI Software indicates footfall on Boxing Day 2024 saw sharp decreases, particularly notable on high streets where footfall plummeted by 6.2%. Shoppers at shopping centres experienced a drop of 4.2%, reflecting consumers' retreat from traditional shopping venues amid rising economic pressures. Experts like Julie Palmer, partner at Begbies Traynor, have warned of the sustainability crisis facing retailers: “The weaker-than-expected retail sales performance in November, traditionally a key month for the sector, highlights the difficulty of trading conditions. Consumers are delaying purchases fueled by low confidence and increased prices.”
The turmoil extends beyond Boxing Day; the number of UK retailers experiencing financial stress has surged over the past three months, with 2,124 businesses now classified as being 'in distress' according to Begbies Traynor. While this figure is slightly down from 2,142 at the end of last year, it reflects the deepening woes of the industry as it grapples with shifts attributed to the lasting effects of inflation, rising interest rates, and geopolitical uncertainty.
Palmer added, “Adding to this uncertainty... we expect elevated insolvency levels across this sector during 2025.” This foreshadowing of rising business failures compels even those retailers deemed resilient to adapt quickly to rapidly changing market conditions. The impact of the Autumn Budget, alongside pushes for national wage increases, is set to add fuel to the fire of financial distress faced by many.
Footfall on Boxing Day 2024 was expected to be buoyed by estimated consumer spending of £3.7 billion. Yet as Jenni Matthews of MRI Software notes, “The decline may reflect consumer habits shifting toward family time and recovery from Christmas festivities rather than engaging with retail.” This sentiment suggests broader changes are taking place as shoppers become accustomed to online sales, often launched just after Christmas Day.
Palmer's analysis also highlights the broader trend: “With footfall levels up 18.1% on Christmas Eve, it appears many shoppers concentrated their spending before Christmas, not after.” This behavior aligns with national trends as consumers increasingly pivot to digital shopping environments, making the onus on retailers to adapt swiftly or face dire consequences.
Kien Tan of PwC echoed this sentiment, stating, “The key element about footfall now is it doesn’t tell the whole story. Many significant retailers have chosen to close on Boxing Day, reflecting changing attitudes where, traditionally, people rushed to the stores for discounts.” The closures of major brands like John Lewis and Marks & Spencer on Boxing Day have added to consumer reluctance to venture out, exacerbated by unpredictable weather conditions.
Scanning the horizon reveals potential perils; consumers are wary as they inch toward economic fragility, triggered by rising living costs. The factors driving footfall declines may signal long-term changes, prompting retailers to reconsider how they reach their customers.
With 2025 looming, the tone from Begbies Traynor maintains a cautious note, pointing to persistent stress across the sector, characterized by high operational costs and fluctuated consumer patterns. Indeed, as Palmer concludes, “Even for those who have been resilient, the hallmark of impending challenges remains. We anticipate numerous financial hurdles will accompany the start of the New Year.”
While retailers hope for improvement as they enter 2025, the drastic changes observed during Boxing Day may very well redefine the future of retail shopping within the UK. With online channels becoming the preferred avenue for many, the traditional significance of festive shopping days like Boxing Day seems to wane, posing new challenges for the industry.
