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Summer hangover impacts UK retail sales in September

UK retail sales decreased by 0.2% on a like-for-like basis in September, compared to a 1.9% rise in the year earlier period, according to latest figures from the BRC and KPMG.

On a total basis, sales increased 0.7% in September, against an increase of 2.3% in September 2017. This is the lowest since October, excluding Easter distortions, and below the 3-month and 12-month averages of 1.2% and 1.3% respectively.

Over the three months to September, In-store sales of Non-Food items declined 2.7% on a total basis and 4.0% on a like-for-like basis. This is in line with the 12-month total average decline of 2.7%.

Over the three months to September, Food sales increased 2.3% on a like-for-like basis and 3.4% on a total basis. This is below the 12-month total average growth of 3.7%.

Over the three-months to September, Non-Food retail sales in the UK decreased 1.6% on a like-for-like basis and 0.6% on a Total basis. This is in line with the 12-month Total average decrease of 0.5%. September Non-Food sales remained in decline.

Online sales of Non-Food products grew 5.4% in September, against a growth of 10.7% in September 2017, the second-best growth of 2017. This is the lowest growth since January and below the 3-month and 12-month averages of 6.7% and 7.1% respectively.

Online penetration rate increased from 22.7% to 24.2% in September 2018.

Helen Dickinson OBE, Chief Executive at the British Retail Consortium, said: “These figures lay bare the difficult operating environment for the retail industry. After a challenging August, constrained consumer spending in September has resulted in the weakest sales growth for five months.

“The retail industry pays a disproportionate amount of tax. It represents 5% of the economy but pays 10% of business tax and almost 25% of business rates. A tax system skewed towards high taxes on people and property is contributing to stores closures and job losses and is stalling the successful reinvention of our high streets.

“Taxes apply to all businesses, so the answer is not additional taxes solely on the retail industry. The Government urgently needs to reduce the business rates burden and create a tax system fit for the 21st century that more fairly distributes taxes right across the economy.”

Paul Martin, UK Head of Retail at KPMG, said: “Like-for-like retail sales in September were down 0.2 per cent on this time last year, but then last year consumers were remaining more defiant in the face of Brexit and shopping regardless.

“Grocery continued to perform, but growth in the category retreated in September. The non-food categories however, continued to disappoint. The historically reliable back-to-school push did not elevate apparel sales. Instead the latest tech launches were a rare source for optimism.

“Online retail continued to fare better. Even clothing sales managed to grab the attention of those browsing the web to refresh their wardrobe.

“The final golden quarter of the year marks the ultimate test for many players, but retailers must also successfully navigate: the upcoming government Budget, Black Friday, Christmas, and of course Brexit.”

Jon Woolven, Strategy and Innovation Director at IGD, said: “The September food and grocery figures cemented the trend in late August for volumes to fall versus 2017, although with some inflation in the mix, sales value remained modestly in growth.

“Shopper confidence has followed a downward path with those expecting to be financially better off over the year ahead dipping from 26 per cent in July to 22 per cent in September. Brexit related uncertainty probably plays a part in this, so retailers will be hoping for a clear resolution ahead of the Christmas shopping season.”

July food and online sales boosted by World Cup and heatwave

The overall quantity of goods bought through all kinds of retail outlets increased by 0.7% in July compared with the previous month, recovering from a decrease of 0.5% in June 2018.

When compared with the same month a year earlier, the quantity bought in July 2018 increased by 3.5% when compared with the slower growth of 1.1% in July 2017.

The latest figures from the ONS also show the quantity bought in non-store retailing showed strong growth both on the month and year-on-year, at 4.9% and 16.9% respectively.

Feedback from non-store retailers suggested that online promotions further encouraged sales, while non-food stores reported a reduction in footfall in July 2018.

Spending online continued to increase to reach a new record proportion of all retailing at 18.2% in July 2018; with strong growth in department stores also reaching a record proportion at 18.2%.

Office for National Statistics senior statistician, Rhian Murphy said: “Many consumers stayed away from some high street stores in July, but online sales were very strong, supported by several retailers launching promotions. Food sales remained robust as people continued to enjoy the World Cup and the sunshine.”

UK retail sales up sharply in Q2, despite June’s fall

The latest figures from accountancy giant EY show that June’s retail sales decline was not enough to prevent a robust outturn for Q2 as a whole, which remained on track to see quarterly GDP growth of around 0.4%.

EY says a broader look at the retail landscape suggests that sales have held up reasonably well given the pressures on spending power. However, it says there is little reason to expect much of a pickup in the short-term.

The firm says the strong retail performance in Q2 supports the case for a Bank of England interest rate hike at the August Monetary Policy Committee (MPC) meeting, after it was diluted by lower than expected consumer price inflation of 2.4% in June and weak earnings growth in May.

Howard Archer, chief economic advisor to the EY ITEM Club, said: “Retail sales volumes fell by 0.5% month-on-month on an including fuel basis in June. But given this followed two very large increases in April and May, sales over Q2 as a whole were still up by 2.1%. This was the strongest quarterly growth since Q1 2004, although the growth rate was heavily flattered by the comparison with the snow-disrupted first quarter. Tthe three-month rate is likely to drop back from July as the soft comparators drop out of the calculation.

“With today’s data suggesting only a modest drop in distribution output in June, we remain on track to see solid growth in services output of around 0.6% in Q2, with GDP set to grow by 0.4%.

“Given the extreme volatility of the monthly data, which can distort even the three-month averages, we often prefer to use a longer rolling average to better gauge the health of the sector. The six-months-on-six-months rate suggests that sales have held up reasonably well given the force of the headwinds from high inflation and weak wage growth, although sales growth remains well down on the 2014-16 period. We find it difficult to envisage much of a pickup in the short-term. Although the squeeze on spending power has eased, it is still not improving, and consumers’ desire to borrow appears to be reaching its limits.”

UK store sales bounce back in May, says BRC data

UK retail sales increased by 2.8% last month on a like-for-like basis from May 2017, when they had decreased 0.4% from the preceding year, according to figures released by the British retail Consortium.

On a total basis, sales increased 4.1% in May, against an increase of 0.2% in May 2017, above the 3-month and 12-month averages of 1.2% and 1.5%, respectively, and the highest increase since January 2014, when not including Easter distortions.

Over the three months to May, in-store sales of Non-Food items declined 3% on a Total basis and 4.1% on a Like-for-like basis.

On a 12-month basis, the Total decline was 0.2%. However, on a monthly basis, it was the best performance since January 2016, excluding Easter distortions.

Over the three months to May, Food sales increased 2.0% on a like-for-like basis and 3.4% on a total basis. This is below the 12-month Total average growth of 3.6%, further evidence that growth has peaked, since inflation started to recede. On a monthly basis, this was the best performance since July 2013, excluding Easter distortions.

Over the three-months to May, Non-Food retail sales in the UK decreased 1.4% on a like-for-like basis and 0.5% on a Total basis. This is below the 12-month Total average decrease of 0.2%. On a monthly basis, this was the best performance since January 2016, excluding Easter distortions.

Online sales of Non-Food products grew 11.9% in May, against an easy comparable growth of 4.3% in May 2017. This is above the 3-month and 12-month averages of 8.8% and 8.1% respectively. Online penetration rate increased from 21.3% in May 2017 to 22.4% in May 2018.

Helen Dickinson OBE, Chief-Executive at the British Retail Consortium, said: “Retail sales in May saw their highest growth since January 2014 as better weather and the bank holiday effect led shoppers to buy from garden furniture and summer fashion ranges; recovering some of the ground lost in April. Food sales also stood out with the best single month’s performance since July 2013. Encouragingly, growth was seen across channels as stores made a comeback with their best showing in 16 months.

“The FA Cup Final and Royal Wedding may have got the nation in the mood for celebration but the day itself was a distraction for shoppers as they stayed at home to watch the festivities; sales also tailed off once the party was over.

“Despite this more positive set of sales results, the retail environment remains extremely challenging, with trend growth still very low by historical standards. Retailers remain focused on investing in new and exciting shopping experiences for the future as margins remain tight and the competition fierce.”

Paul Martin, Head of Retail at KPMG said: “May provided a much needed uplift to retail performance delivering a respectable 4.1 per cent growth. Two bank holiday weekends, a Royal wedding and of course sunnier spells will have been the main drivers behind the apparent rebound, with both online and high street sales thankfully up overall.

“Grocery sales once again continued to be strong, boosted by added enthusiasm for picnics and barbeques. Elsewhere, appetite for non-food categories, including fashion, also experienced a welcome uplift. That said, the picture was less favourable in the larger discretionary categories such as home improvement and furniture.

“While the month’s figures may paint a rosier picture, there is no room for complacency. The market is increasingly being split into winners and losers, with a number of legacy players continuing to face extremely challenging conditions. As such, focusing on transforming businesses both operationally and financially is pivotal.”

UK retail sales rally slightly in April

New figures from the Office of National Statistics have revealed that UK retail sales lifted slightly in April, reversing the decline that was witnessed in March.

As the High Street suffers store closures, troubled UK retail veterans and more, the news has provided a glimmer of hope for the sector. Key highlights of the ONS report include:

  • In April 2018, the quantity of goods bought in the retail industry remained relatively flat with a slight increase of 0.1% in the three-month on three-month movement.
  • When compared with March 2018, the quantity bought in April increased by 1.6% as all sectors, excluding department stores, recovered from the declines seen in March.
  • Department stores showed a different monthly picture to all other sectors as the only sector to report a fall in quantities bought, at negative 0.9% in April following strong online sales in March.
  • Petrol sales reported the largest recovery in April, with a growth of 4.7% compared with a decline of negative 6.9% in the previous month as road closures affected travel in March.
  • Removing the monthly volatility, the combined two months of March and April compared with the same periods a year earlier showed a general slowdown to growth at 1.3% for March and April 2018 when compared with 2.9% for March and April 2017.
  • Online sales as a proportion of all retailing continued to grow year-on-year at 17.3% in April 2018, in comparison with 16.1% in April 2017; with food and clothing stores achieving record online proportions.

Commenting on the figures, Rob Kent-Smith, Head of National Accounts at the ONS said: “Retail sales bounced back in April, as petrol and other sales recovered from the snowfall. But the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged.

“Increases were seen across all sectors in April, except department stores. Department stores declined following relatively strong sales last month, when their online sales were boosted during the adverse weather.

“Over the longer-term, retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing.”

No stampedes, but Black Friday boosts High Street footfall

UK retail footfall on Black Friday was up +0.95% on 2016, with 42% of retailers experiencing footfall growth.

The figures comes from the Ipsos Retail Performance Retail Traffic Index (RTI), which monitors the number of individual shoppers entering over 4,000 non-food retail stores across the UK.

Director of retail intelligence at Ipsos Dr Tim Denison commented: “The scenes in stores up and down the country thankfully didn’t repeat the chaos and madding crowds of 2014 – however, retailers will be happy to see some controlled growth on last year’s footfall.

“There had been much conjecture this year about whether Black Friday would be a hit or miss with UK shoppers, and many retailers followed the lead of their US counterparts, extending their promotional campaigns over two weeks or more, which did risk diluting the impact of the event.”

Fortunes were mixed, which reflected the varying emphasis retailers gave to online or in-store campaigns in their Black Friday strategy. Following the success of online and mobile sales last year, many retailers sunk more time and effort into their digital campaigns.

Denison continued: “The million pound question on everyone’s lips now is how will Christmas shopping fare in the wake of the Black Friday promotional campaigns? Last year, sales were pulled forward by the increased November activity, and as we move into December, we’re expecting to see a repeat of last year’s pattern with footfall slow to build, after Black Friday has taken the stuffing out of bargain-hunters, but we’re predicting a resurgence of activity in the last week before Christmas.”

To read more about Black Friday download the Ipos Retail Performance White Paper here

Retail sales drop in first annual fall since 2013

The Office for National Statistics (ONS) has released figures that show that UK retail sales fell by 0.3 per cent in October compared to the same period in 2016 – the first annual fall since 2013.

The ONS has put it down to a strong performance in October 2016, but also said that higher inflation may have dampened spending, with economists also citing unusually mild weather hampering sales.

Sales in October rose 0.3 per cent from September, with sales 0.9 per cent higher during the August-October period than in 2016.

“Unseasonably mild weather – average temperatures were 1.7C above their 1970-to-2016 October average – was likely the main driver of the 1.5 per cent month-to-month decline in clothing sales,” commented Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“Retail sales volumes recovered only partially from September’s 0.7 per cent month-to-month drop, underlining that consumers now have adopted a cautious mindset,” added Tombs.

 Kate Davies, statistician at ONS, said: “We are continuing to see an underlying picture of steady growth in retail sales, although this October suffered in comparison with a very strong October in 2016.”

August boost for UK retail sales

A report looking at European shopper trends in Q3 2017 has found that retail sales in the UK through August broke all expectations, providing a boost for the Pound and growing well above the consensus forecast of 0.2%.

The report, commissioned by ShopperTrek, also found that Q3 store traffic was down by -2.3% with each month of July, August and September marginally down against the same period in 2016.

Despite the dip in traffic volumes, retail sales in July and August climbed by 1% with an equal rise in both value of sales and volume, with the survey indicating that consumers were not put off by having to spend more on goods.

Retailers across Europe did well to achieve an overall +0.5% uplift into stores and shopping centres. However, only two countries failed to see Year-on-Year growth in the quarter, the UK and Switzerland.

European Overall Q3: +0.5% YOY

Italy: +2.6%

Poland: +2.1%

Spain: +1.0%

France: +0.7%

Portugal: +0.5%

Republic of Ireland: +0.2%

Germany: +0.2%

UK: -2.3%

Switzerland: -0.3%

Shopping

BRC: Shopper visits through March 2017 a “reassuring sign for retailers”

The British Retail Consortium (BRC) and retail intelligence specialists Springboard have released figures covering the five weeks 26th February – 1st April, showing retail footfall in March grew 1.3% on the previous year, the fastest growth since 2014.

The figure was above the three-month average of -0.2%, although March 2016 included Easter Sunday when many retailers were closed, while the 2017 figure does not and effectively adds one more day’s footfall to the period.

The high street saw the greatest percentage of footfall growth: 1.7%, followed by retail parks at 1.4% and shopping centres at 0.2%. The steepest decline in footfall occurred in Northern Ireland, which fell by 3.7%, followed by the South West at 2.3%.

“Shopper visits increased to all retail destinations in March, resulting in the fastest annual growth in footfall for three years,” commented Helen Dickinson, OBE, chief executive BRC. “This is partly owed to the exclusion of Easter Sunday from the period, which therefore benefits from an additional shopping day. But even looking beyond the distortion, the positive growth across most of the country is a reassuring sign for retailers.

“The high street continues to outperform shopping centres and retail parks, for the second consecutive month. Disappointingly though, this didn’t translate into retail sales, which were down in March on the previous year. Now that the Easter holidays have arrived, the challenge for retailers will be to attract this greater number of high street visitors into their stores.”

Diane Wehrle, Marketing and insights director, Springboard, added: “March definitely provided a break in the clouds, with the +1.3% rise in footfall breaking a six-month consecutive decline and the +0.2% increase in footfall in shopping centres being the first since January 2016. Whilst some of the +1.3% may have been a consequence of the loss of a trading day last year due to an early Easter, the impact of this shift should not be overstated as it will have been mitigated by increased trade on the other days over the Easter trading period.

“Indeed, if anything it is more evidence of the continuing structural shift in the use of retail destinations for leisure and hospitality trips. Virtually all of the increase in footfall in March was derived from the post 5pm period while footfall during the trading hours of 9am to 5pm dropped –by just -0.5% in high streets, but much more significantly, by -7.1%, in shopping centres. Indeed, the worsening of consumer confidence and inflation from last year is likely to be constraining shoppers’ willingness to spend on retail goods. This all lends further evidence to the fact that retail is no longer the sole driver of footfall, with a strong leisure/hospitality offer being a critical element to secure retail success.”

www.brc.org.uk