High streets defy consumer darkness.

Many retail areas, from food to technology, have been broadly deflationary for years, increasing the

purchasing power of consumers. That changed in 2022 as prices surged, particularly following Russia’s invasion of Ukraine, and meant that retailers needed to sell fewer wares to achieve the same revenue. As a result, consumers bought fewer things, but retailers’ turnover still rose. In addition, December 2021 was marked by the rapid advance of the Omicron variant of coronavirus. Although no national lockdowns were imposed, many consumers were wary of mixing in crowded places or having smaller gatherings at Christmas.

That hurt retailers with thousands of stores and meant that this year’s sales were up against weak comparative figures. When Britain was gripped by fear of Covid, consumers primarily shopped online. But one of the defining trends of last year was the return to shops, and stores got a further boost in December from a sudden cold snap and disruption to delivery services due to postal strikes. «The channel shift has been a benefit for the biggest retailers,» said Lisa Hooker, head of UK retail at PwC.

«The online share of sales is now only a year ahead of where it would probably have been had Covid never happened». At Next, store sales grew 7.5 per cent in the nine weeks to December 30, while online sales fell. At Marks and Spencer, clothing sales in stores were up 12 per cent in the third quarter. Sales made in stores generally mean higher profit margins than those made online for many retailers because the customer bears the cost of «last mile» transport, and the running costs of stores are primarily fixed.

Supermarket bosses readily acknowledged that consumers shopped earlier and more carefully this year. Hooker added that in-person gatherings of families «tend to mean more food and more presents», which may explain why half of the respondents to PwC’s latest survey ended up spending more on presents, not less. That meant many retailers, especially in toys, electronics and technology, went into their peak trading period with less inventory than usual. Next chief executive Lord Simon Wolfson said that with hindsight, availability may have affected sales more than he believed at the time, with a correspondingly beneficial impact in 2022.

Many retailers issued their most recent and arguably conservative profit guidance between April and October, a period bookended by Russia’s invasion of Ukraine and the brief but chaotic Liz Truss premiership in the UK. However, as some inflationary pressures lower, chief executives are more confident. «There is nothing yet that we are apprehensive about,» said M&S chief executive Stuart Machin when asked about the outlook this week.

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