Industry

Online sales grew by 5% in January, but store sales were down

Black Friday online

Online sales grew modestly in January, while store sales fell – and overall retail sales lifted slightly on last year, according to the latest figures from the British Retail Consortium (BRC).

The BRC-KPMG Retail Sales Monitor for January 2018 found that ecommerce sales of non-food items grew by 5.3%, against growth of 8% in January 2017, and by 6.6% over the last three months. But in-store non-food sales were down, falling by 2.9% in total in the three months to January and by 2.3% over the last year. Like-for-like sales were down by 3.6% over the last three months.

Some 22.2% of retail sales, by value, took place online in January, according to the BRC, up from 21.9% a year earlier.

Food sales were relatively buoyant, growing by 2.9% on a like-for-like basis and 4.1% on a total basis, and ahead of the 12-month total average of 3.7% growth. That’s the highest since November 2012.

Overall total retail sales grew by 1.4% in January, the index suggested – ahead of growth of 0.1% the previous January, while like-for-like sales – stripping out the effect of store openings and closures – grew by 0.6%, contrasting with a fall of 0.6% the previous year.

Paul Martin, head of retail at KPMG [IRDX VKPM] said: “January typically presents retailers with a tough gig persuading shoppers to spend in what is a cash-strapped month for most. With that in mind, 1.4% growth – or 0.6 per cent on a like-for-like basis – has to be seen as a success, albeit food sales continue to be the driver of this growth.

“There was little growth in most categories besides food. Bigger ticket items such as furniture traditionally rely on strong post-Christmas trade, but this year seem to have struggled to woo consumers with the lure of a sale sign in the window. Online sales fared better, with bargain hunters most interested in fashion and tech.

“With Christmas reporting now behind us, the true financial health of the industry comes into focus. For many retailers, online sales have taken the sting out of the challenging trading environment. It’s therefore not surprising to see many retailers rethink their physical presence. Ensuring you can deliver a customer-centric and channel agnostic proposition will increasingly split the winners from the losers in 2018.”

Helen Dickinson, chief executive of the BRC [IRDX VBRC], said: “The persisting tough trading environment played out at the start of the year with a mixed set of trading updates and subsequent announcements. Sales as well as profits are seemingly harder to come by. Against this challenging back-drop, 2018 didn’t have a bad start during what is traditionally a lean month, with sales creeping up in-line with the year’s average.

“The figures paint the same old picture of divided fortunes for food and non-food sales. Rising food prices continued to inflate sales growth and absorb the lion’s share of shoppers’ squeezed budgets, while sales of non-food items struggled in January, dragging the 12- month average into negative territory for the first time in nine years.”

“Clothing however, bucked the winter trend for the non-food categories. Some retailers were able to scale back promotions, having shifted more of their stock during the festive sales than last year, and saw encouraging early demand for their new season ranges.

“Overall though, the going remains bumpy as consumers are still seeing wages fall in real terms. Although inflation will ease a bit this year these pressures will remain. So to ensure no more pain is added to household budgets, we want to see our Brexit negotiators focus on delivering the terms of the transition to provide businesses and consumers with some much needed certainty.”

Mentioned in this piece…

KPMG

KPMG

IRDX: VKPM

KPMG in the UK has over 10,000 partners and staff working in 22 offices and is part of a strong global network of member firms. Our vision is simple – to turn knowledge into value for the benefit of our clients, people and our capital markets. Our innovative spirit inspires what we do and how we do it, providing valuable benefits for clients, employees and stakeholders. Constantly striving to be better lies at the heart of what makes us different. (more…)

British Retail Consortium

British Retail Consortium

IRDX: VBRC

The British Retail Consortium (BRC) is the lead trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores. (more…)

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