The High Street's Most Miserable Christmas

So now it’s official. Leaving aside the big freeze in late 2010, this was the worst Christmas for British retailers for more than a decade.

If the collapse of a series of high street retailers wasn’t evidence enough, now we have the verdict from the Office for National Statistics. It has found that total retail sales excluding fuel dropped by 0.3% in December.

The ONS said this was the worst December performance since 1998 – save for the weather-affected drop in late 2010.

Retail sales growth during Christmases past. Source: ONS

However, the picture for the high street stores was even worse than the headline figures, since a growing share of shopping is now done online. The ONS said that the proportion of internet sales has risen from just over 2% of all sales in 2006 to 10.6% of sales in December.

The ONS said that normally the share of internet sales drops sharply between November and December, as consumers take to the high street for Christmas shopping, but added: “Feedback provided by retailers this month suggests that sales made via the internet helped to boost overall sales and provided a much greater proportion of sales in December than they were expecting.”

Economists had been expecting far stronger retail sales figures for December. The disappointing numbers reinforce the notion that the overall economy shrank in the final quarter of the year, leaving Britain one step closer to a so-called triple dip.

The ONS said that the main contributor to the fall in sales was non-food goods – particularly household goods, which dropped by 3%. Food sales also fell 0.3% on the month.

How retail sales have plateaued since the onset of the crisis. Source: ONS

The slide in retail spending is particularly significant in the UK since, until the recent crisis, Britain was disproportionately reliant on consumer spending for its economic growth. But since 2008 retail spending volumes have effectively plateaued as hard-pressed consumers have struggled to afford goods.