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Food and clothing prices drives retail sales through September

Retail sales growth was driven through September thanks to higher food and clothing prices, figures from the British Retail Consortium (BRC) and KPMG have shown.

Like-for-like retail sales rose by 1.9% in September, higher than the 0.4% increase in September 2016. Total sales climbed by 2.3%.

“Retailers have worked hard to keep a lid on price rises following the depreciation of the pound, but with a potent mix of more expensive imports and increasing business costs from various government policies, something had to give at some point,” said Helen Dickinson, chief executive at the BRC.

“Spending is still being focused towards essential purchases; with consumers buying their winter coats and back to school items, but shying away from big ticket items such as furniture and delaying the renewal of key household electrical goods.”

On a like-for-like basis over the three months to September food sales rose by 2.5% and 3.5% total, with non-food sales rising by 0.5%, or 0.9% total.

Paul Martin, KPMG UK’s head of retail, said: “With potential interest rate rises on the horizon, shaky consumer confidence and ever-increasing levels of household debt, uncertainty remains.

“We’re now moving into the final quarter, which will ultimately define whether 2017 has been a good or bad year for retailers.”

Scottish retail figures on the up after disappointing summer

Figures released by the Scottish Retail Consortium (SRC) found that retail sales improved through Scotland in August after a tough summer.

Total sales grew by 1.3% in August after deflation adjustment, which was up on the three and 12 month averages. Food sales boosted total sales with an increase of 4.1%, compared to a decrease of 0.3% in August 2016.

There was a decline of 1.5% of total non-food sales through August; however this was offset when compared to a decrease of 3.7% in August 2016.

Speaking about the figures, Ewan MacDonald-Russell, head of policy and external affairs for SRC said that the figures were good news “on the surface,” but warned that the year-on-year food sales was driven in part by food inflation of 1.3%.

“Retailers will welcome these figures after a pretty disappointing summer,” added Russell.

“However, the underlying challenges facing the industry, not least the continued pressure on household incomes and fragile consumer confidence, mean Government should be very careful about any policies which could lead to increases to the cost of living.”

Craig Cavin, head of retail in Scotland for KPMG, commented: “Grocery sales lead the charge once again, with a 4.1% year on year increase bringing the 12-month average to its highest level for more than three years.

“With August bringing children’s return to school, the Edinburgh Festival and the release of autumn clothing ranges, non-food’s recent poor performance received a late summer boost, with online sales nudging the category into growth.”

British Retail Consortium

UK retail sales fall for first time in six years

Latest statistics from the British Retail Consortium have revealed that in February UK retail sales dipped by 0.4 per cent on a like-for-like basis with February 2016.

Over the three-months to February, non-food retail sales in the UK declined 0.4 per cent on a like-for-like basis and 0.2% on a total basis.

This is the first three-month decline since November 2011, dragging the 12-month total average growth to 0.6 per cent, the lowest since May 2012.

Meanwhile, over the three-months to February, online sales of non-food products grew 7.7 per cent while in-store sales declined 2.4 per cent on a total basis and 2.6 per cent on a like-for-like basis.

The BRC-KPMG report was published this morning (March 7th).

“Overall growth was subdued in February, driven by a continuation of the slowdown in non-food sales. This was marginally offset by slightly stronger growth in food sales,” said Helen Dickenson OBE, chief executive of the British Retail Consortium. “There was some negative distortion created by the later timing of Mother’s Day this year, which meant that some categories, notably women’s accessories and health and beauty, didn’t benefit from the build-up of gift purchases as they did last year. But looking beyond this distortion, the persistent weak sales performance of several non-food categories points to an undeniable trend of cautious spending on non- essential items.

“Tougher times are expected ahead. The impact of inflation on consumer spending will add further intensity to an already fiercely competitive environment in which the ability to adapt and innovate will be key to survival. Looking to the Budget this week, we hope to see a commitment from Government to lay a path to a truly sustainable business rates system that will give retailers the flexibility needed to invest and support their local communities.”

KPMG’s UK head of retail Paul Martin added: “Evidently February was yet another challenging month for the majority of retailers, with like-for-like sales down 0.4 per cent on last year. Food sales however, continued to buck the general trend by remaining in the black. That said, with inflation starting to have an impact on retail performance, it is clear that consumer confidence is showing signs of deteriorating.

“School half-term holidays are likely to have contributed to the stronger performance in children’s toy sales during the month. Likewise, furniture and home textile sales will have benefited from parents using the holiday as an opportunity to spruce up the home.

“Retailers will be paying close attention to the upcoming Spring Budget in the hope of seeing some measures to ease the pressure being placed on margins. For some bricks and mortar retailers, a hike in business rates may well be the straw that breaks the camel’s back.”