The decline in the number of shoppers hitting the high street on Boxing Day marks a return to the sluggish pre-COVID-19 pandemic figures amid financial strain among retailers and domination of online sales, new reports suggest.
While £4.6 billion is expected to be spent during the festive sales, nearly 65 percent of shoppers are opting for online purchases, further reducing footfall in physical stores.
Before the pandemic, the number of Boxing Day shoppers on the streets had been steadily declining each year, by 5 to 12 percent annually. The last increase was recorded in 2015.
Many shoppers also bought essentials before Christmas, with Christmas Eve footfall up 18 percent compared to 2023.
Jenni Matthews, marketing and insights director at MRI Software, said the shift shows changing habits, with consumers preferring convenience and early bargain hunting.
“We see the shops are full of people all the way up to Christmas Eve, so they’ve probably got a couple of good days of food, goodies, everything that they need, and they don’t really need to go out again until later on in that week.
Retailers Under Financial Strain
The Boxing Day data come after a challenging period for the retail sector between October and mid-December.The latest Red Flag Alert report from insolvency specialists Begbies Traynor found that 2,124 British retailers were in critical financial distress during the period, in a 25 percent increase from the previous quarter.
General retailers, food and drug stores, and online sellers were among the hardest-hit sectors.
Julie Palmer, a partner at Begbies Traynor, highlighted rising operational costs and squeezed consumer spending as the key factors.
“This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.
“Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending,” she said.
High-profile brands like Homebase have already succumbed to the pressure, entering administration in November after three challenging years in the DIY sector.
Although there was a slight year-on-year improvement in distressed businesses, Palmer said some were more “vulnerable” to online competitors such as low-cost fast-fashion companies Temu and Shein.
Policy changes in the October Budget are expected to “dial up” the challenges faced by businesses, Palmer added. Planned increases to employers’ national insurance contributions and the minimum wage will “negatively impact cash flow,” she said.
Growth and Business Confidence
The economy showed no growth in the third quarter of 2023, with GDP stagnating between July and September.Chancellor Rachel Reeves has acknowledged the significant challenge of reviving the economy, which she described as being in “a huge state of neglect” after 15 years.
“Our plan will deliver sustainable long-term growth, putting more money in people’s pockets through increased investment and relentless reform,” she said.
However, inflation continues to rise, hitting 2.6 percent in November, up from 2.3 percent in October, exceeding the Bank of England’s target of 2 percent. Interest rates remain at 4.75 percent, as the bank maintains its cautious approach to the economic outlook.
Business confidence is also at its lowest point in two years, according to the Confederation of British Industry (CBI). A recent survey found private sector activity fell by 21 percent in the three months to December, with firms citing rising employer costs and weak demand as major concerns.
Alpesh Paleja, CBI interim deputy chief economist, described the outlook as “the worst of all worlds,” noting that businesses are looking to the government for reforms to boost confidence and encourage investment.
In response to the economic challenges, Labour has emphasised its industrial strategy, set to be published in 2025, as a roadmap to recovery. The strategy focuses on eight key sectors, including clean energy, manufacturing, digital tech, and life sciences to drive long-term growth.
