UK’s Christmas food sales growth driven by premium and luxury lines and giving food as gifts

Food sales spiked over the holidays as consumers celebrated with premium and luxury lines but retailers experienced “the worst overall Christmas on record.” UK retail food sales grew in December 2020 with year-on-year growth at 5.4 percent, in spite of COVID-19 headwinds.

“December 2020 saw the highest-ever festive spending in the UK food and grocery retail sector and was largely in line with the elevated trend through the year,” details Susan Barratt, CEO of food and grocery charity IGD.

In spite of this uptake, data from the British Retail Consortium (BRC) has revealed an overall retail sales decline of 0.3 percent in December 2020, compared the previous year. This is flagged as a “record low,” from a starting point of 1995. 

“Over the three months to December, food sales increased 6.8 percent on a like-for-like basis and 7.3 percent on a total basis. This is higher than the 12-month total average growth of 5.4 percent,” outlines Barratt.

2020 is a 53-week year in the UK’s Office of National Statistics (ONS) calendar. As a result of the extra week in January 2020, the comparable 2019 performances cited here may differ from those published last year, due to the one-week shift in the comparison, notes the BRC.

Gift giving pushes up demand for premium lines
“Tightening restrictions across much of the country limited other sales channels and enabled supermarkets to get the full benefit of people celebrating with food and drink,” continues Barratt.

“Though last-minute changes put the brakes on larger family gatherings, shoppers nevertheless sought to make up for their disappointments by trading up to treat themselves and their immediate households with premium and luxury lines.”

In a flavor trends report from 2020, Innova Market Insights underscores that indulgence remains a key taste priority for many as a means of taking the edge off the ongoing pandemic.

“Worst year on record for retail sales growth”

Despite the uptake of food purchases, COVID-19 has led to 2020 being the “worst year on record for retail sales growth,” details Helen Dickinson, BRC chief executive.

“Christmas offered little respite for these retailers, as many shops were forced to shut during the peak trading period. However, this led to a rise in food-based gifts as many shoppers bought what they could from the shops that were still open,” she notes.

“With shops still closed for the foreseeable future, costing stores billions in lost sales, many retailers are struggling to survive.”

To avoid the unnecessary loss of shops and jobs, Dickinson urges that the UK government should announce an extension to business rates relief for the worst-affected businesses as soon as possible.

“With many retailers making decisions over their future, the government must act decisively.”