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Growth in June online and offline spending prompts optimism

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Online sales last month enjoyed their fastest growth since Christmas, according to new figures out today, after warm June weather encouraged shoppers to update their wardrobes and spend on both on gardening and DIY. The figures, which also show rising high street sales, being hailed as evidence that the “UK economy is turning a corner.”

The news comes as investment in retail rises and the number of retail administrations falls, compared to the same time last year.

New figures out from the British Retail Consortium and Barclaycard put June ecommerce growth at 14.1% and 12.5%, respectively.

“It’s been a strong month for online sales,” said Helen Dickinson, director general of the BRC , “and our figures show they were the best for a year if you exclude Christmas. Online sales accounted for over a third of total non-food growth.”

The BRC-KPMG Retail Sales Index, published today, showed a 14.1% boost to retail sales made over the internet last month, compared to the same month last year. In June 2012, they had risen by 12.1%. This is the strongest growth, said the BRC, since July 2012, excluding Christmas.

Total sales, which mostly take place in shops, grew by 2.9% in June, the BRC-KPMG figures suggested. On a like-for-like basis, which strips out the effects of store openings and closures, sales grew by 1.4%.

The BRC-KPMG Retail Sales Monitor also said the lift in online sales, was ahead of the long-term average of 10.5% and that it came at a time when more retailers are investing in distribution centres in order to make supply chains more efficient and delivery times faster.

It detected an upturn in retail investment, evidenced by shopping centre investments that were more than doubled in the first half of 2013 to £1.9bn from £808m in 2012, according to real estate brokers and consultants Cushman & Wakefield. At the same time retail failures are falling. Deloitte figures showed that the number of retailers falling into adminstration in the first half had fallen by 30% to 87, down from 124 at the same time last year.

Meanwhile, Barclaycard’s analysis showed rises both in ecommerce spending and instore spending, which was up by 3.2%. Overall, consumer spending rose by 4.9%, it said.

Val Soranno Keating, chief executive of Barclaycard, said June had been a buoyant month for consumer spending. “It’s the highest spend growth that we’ve seen in 18 months,” said Keating, “the third month in a row where it’s outstripped inflation and means that consumer spend was up (3.3%) for the first half of the year against 2012, providing further evidence that the UK economy is turning a corner.

“More good news is that growth in spending was seen both online and in-store, with online spend growing 12.5% year-on-year and high street spending up just over 3%, the highest rate seen so far in 2013.”

Some 19.7% of spending took place online, 1.4 percentage points up on the same time last year.

Both the BRC and Barclaycard put the growth in spending down to warmer weather, which came in tandem with price cuts and promotions.

The BRC figures showed fashion was one of the best performing areas. Dickinson said: “As the weather warmed up, we saw a good reaction to the excellent promotions that are available at the moment, accompanied by continuing demand for value and essential items. The weather also helped DIY and gardening products record a good month and we saw some of the purchases that may have been postponed during the cold weather earlier in the year begin to take place.”

Online, she said, clothing, shoes and electricals equipment sold well, the latter thanks to “good deals”.

Barclaycard detected a 4.2% rise in clothing sales while spending at garden centres and DIY stores was up by 19% and 8% respectively. Department stores, however, saw sales fall by nearly 6%, compared to last year, while spending in electronics stores was down by 1.6%, year-on-year.

But online, said Barclaycard, almost all categories grew, compared to the same time in 2012. And while overall electronics sales were down, online spending on electronics rose by 32%, year-on-year. Women’s clothing enjoyed a 28% boost to spending, compared to 2012. Online cinema and theatre (27%) and furniture (26%) spend also saw significant increase compared to last year.

David McCorquodale, head of retail at KPMG, said: “This is another respectable performance by UK retailers. Sales are moving in the right direction, albeit hard-earned and promotion driven. The statistics are all the more creditable as last year's sales included a Jubilee boost.‪"

Commenting on food and drink sales that, according to the BRC figures, were down by 0.3% over the last three months on a like-for-like basis, while total sales were up by 1.3%, Joanne Denney-Finch, chief executive of grocery analysts IGD, said there were signs that shoppers were becoming more optimistics. "Our ShopperVista research shows while four out of ten of them expect to be worse off over the next 12 months, this is down from 61 per cent in January 2011. This is the least pessimistic since we started tracking it three years ago.”

The Barclaycard spending figures are based on spending on Barclaycard's UK credit cards, Barclays debit cards and transactions processed by Barclaycard's payments solutions business.

KPMG aggregates data from retailers, weighted to reflect UK retail sales as a whole.
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