Ecommerce and food sales drove retail sales growth this February, new data from the British Retail Consortium (BRC) suggests.
Overall UK retail sales grew by a total 1.6% – or 0.6% on a like-for-like basis that strips out the effect of store openings and closures – in the four weeks to February 24, according to the latest BRC-KPMG Retail Sales Index. Online sales of non-food items were up by 6.4%, compared to the same time last year, while in-store sales of all products were down by 1.6% in total (3.3% like-for-like).
But while in-store food sales increased by 4% in total (2.8% LFL) in the three months to February, in-store non-food sales fell by 2.4% in total (-3.3% LFL) over the same period. This February, 21.1% of all retail sales took place online, up from 20.5% a year earlier, according to the BRC figures.
Helen Dickinson, chief executive of the BRC [IRDX VBRC], said: “The headwinds to retail spending continued to blow strong in February. Inflation is still eating into shoppers’ budgets, pushing them to spend a greater share of their income on essentials and leaving less left over to buy discretionary, predominantly non-food, retail items. At the same time, weak growth in household earnings is keeping overall sales low.
“There’s little sign that consumer confidence, rather than financial reality, has much to do with the current weakness in spending. Furniture, often considered the bell weather of consumer confidence, actually saw sales improve in February as shoppers took advantage of credit facilities offered by retailers. The fact is that consumers want to spend, they just don’t have the resources to do so.
“With the upward pressure on prices from the fall in the pound now starting to subside we expect to see some loosening of the squeeze on spending on non-essentials, but it’s likely to come slowly. And so are anticipated increases in wage growth. Crucial for consumers and retailers over the coming months will be a successful outcome to trade negotiations, ensuring that amidst the current difficulties, they won’t be facing further increases in costs from new tariffs on the everyday goods we import from the EU.”
Last February UK retail sales were up by 0.4% in total, with online non-food sales up by 8%. Over the last 12 months, total sales have risen by 1.7%, according to the BRC, while in-store sales have fallen by 2.2% and online sales have risen by 7.7%.
Paul Martin, head of retail at KPMG [IRDX VKPM], said: “Retailers experiencing any growth in this environment will be counting themselves lucky. Indeed, total growth of 1.6% in February is quite an achievement in such testing times. Softening consumer demand, rising costs for retailers and of course the ongoing structural changes within the industry, are creating the perfect storm which is uprooting the weakest players.
“On the high street, it was grocery sales that continued to pull it out of the bag. Meanwhile, Shrove Tuesday may have resulted in an uptick in cooking accessory sales, but performance in non-food in general was once again disappointing.
“Online retail appeared to have fared better – with growth across all categories – but the latest figures reinforce an underlying trend of a slow-down in growth online, which prompts concern.
“The retail shakeout will gather further momentum in the coming months, and retailers with large physical store estates are particularly under pressure. Moreover, the cost of one of the coldest winters on record has yet to be factored in. It’s not all doom and gloom though, a number of retailers are bucking the overall trend by focussing on a differentiated proposition whilst remaining relevant to the customer.”
Joanne Denney-Finch, chief executive of food and drink analysts IGD, said: “February was another steady month for food and grocery sales and included the usual boost from Valentine’s Day. From our ShopperVista tracking, 35% of shoppers say they spend more on food and drink during celebratory occasions such as this.
“The next big event is Easter and since warm conditions promote higher food and drink sales over that holiday weekend, retailers will be hoping for a transformation in the weather during March.”
Mentioned in this piece…
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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