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Brexit uncertainty thought to be behind slowing retail sales – and stockpiling

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Retail sales growth slowed online and offline in February in the light of uncertainty about Brexit, new figures from the British Retail Consortium (BRC) suggest.

Meanwhile, Barclaycard figures found that 18% of UK consumers were now stockpiling against the threat of a ‘no deal’ Brexit, in which the UK leaves the EU on March 29 without any future trade deal in place with the European Union.

Cross-channel retail sales trends

The BRC-KPMG Retail Sales Monitor for February 2019 found online sales of non-food products grew by 5.4% during the month. That’s down from growth of 6.5% at the same time last year, and is below both the three-month (+5.6%) and the 12-month (6.9%) longer-term trends. 

A greater share of retail transactions took place online during the month, the report found: 29.6% of retail sales took place over the internet, up from 27.5% last February.

Across all channels, retail sales grew in total by 0.5% in February. That’s down from an increase of 1.6% at the same time last year, and is below the longer term three-month (+0.9%) and six-month (+1.2%) trends. They were down by 0.1% on a like-for-like basis that strips out the effect of store – and business – openings and closures.

Helen Dickinson, BRC chief executive, said: “Uncertainty surrounding the UK’s imminent exit from the European Union has hit consumer spending. While real incomes have started to rise over the past year, shoppers have been reluctant to spend this February, holding back growth. The slowdown was not limited to physical stores, with growth in online non-food sales well below the 12 month average. 

“With consumers increasingly aware of the risk of a no deal Brexit, it is likely that uncertainty has driven this cautious approach to retail spending. If Government wishes to reassure both the public and businesses they should ensure a chaotic no deal – which would lead to higher costs, higher prices and less choice for consumers – is taken off the table with immediate effect.”

Susan Barratt, chief executive of grocery analysts the IGD, said that as yet Brexit had had little effect on grocery sales, with “the majority of people shopping as normal.” 

Paul Martin, UK head of retail at KPMG, said there had been sluggish growth across categories. “The milder weather appears to have shifted the focus away from indoors with furniture sales declining – and not even Valentine’s Day could boost sales in the stationery category,” he said.

Brexit uncertainty drives fall in non-essential spending – and stockpiling

Barclaycard said its figures suggested that growth in consumer spending fell to 1.2% last month, with non-essential spending growing by just 0.8%. Within that, department store sales were down by 5.5%, year-on-year, while clothing sales ere down by 5.2%. Barclaycard draws its figures from the credit and debit card transactions that pass through its systems – it says it handles almost half of all those payments made in the UK. 

Barclaycard says consumers are taking a cautious approach to spending, as 50% of UK adults worry about that Brexit will have a negative effect on the UK economy, and more than half are concerned that a rise in the cost of everyday items will hit their spending. 

And it says that 18% – almost one in five – of UK residents have started stockpiling essential food items in case of shortages in the near future.

Esme Harwood, director at Barclaycard, said: ““Uncertainty over Brexit appears to be driving a shift in behaviour, with many Brits worrying about price rises and cutting back on non-essential spend, and some even stockpiling everyday items. 

“Discretionary expenditure has seen a considerable decline – spending at retailers continues to decrease, and even hotels, pubs and restaurants are feeling the impact of cutbacks.”

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