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Growth in online sales slows as consumers continue cautious: BRC

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Online sales growth slowed in February, as customers continued to fear for their financial prospects, according to the latest figures from the British Retail Consortium (BRC).

The BRC-KPMG Retail Sales Monitor for February 2012 showed a 9.9% rise in sales in the non-food, non-store category, which is predominantly accounted for by internet sales, alongside telephone and mail order.

While the figure was well ahead of the 2.3% rise in total UK retail sales and the 0.3% fall in like-for-like UK sales, it represented a slowdown on the figures both for last month and last year. In January 2012, ecommerce sales grew by 11.3%, and in December 2011 by 18.5%. Last February they grew by 10.4%.

“Online continues to grow faster than any other retail channel,” said Stephen Robertson, director general of the BRC, “but the rate of increase in sales has slowed since Christmas and is well down on the kind of performance that was typical in 2010 and before.

“Non-food sales have been worst affected by customers’ continuing fears about their own finances and prospects. That’s being felt online as well as in stores, but the slowing of online growth may now also be reflecting some maturing of the market.”

Across UK retail, food sales grew by 4.9% in total, or 1.9% on a like-for-like basis, as, said the BRC, shoppers stocked up in the cold weather. Non-food grew by 1.9% in total and fell by 0.3%, like-for-like, despite promotions and discounts. The BRC said February was slower for sales of larger purchases, clothing, footwear and homewares, as cautious consumers held back from spending.

“The reality of weak sales shows that a convincing reality remains illusory,” said Robertson. “Falling inflation has eased the squeeze on household finances and halted the slide in consumer confidence but that’s at risk from fuel price rises and Budget uncertainty.

“Unemployment is expected to rise further, causing increased nervousness about job security, which is keeping confidence fragile. Any sense of improving optimism is not yet translating into more spending.”

He also called on the Chancellor to use the Budget to “hold back business costs, which will support jobs, growth and the much-needed consumer turnaround.”

Helen Dickinson, head of retail at KPMG, said: “Consumers remain reluctant to spend unless encouraged by promotional activity. Thus, while the market is still growing slightly in headline sales terms, profitability continues to be eroded through loss of margins.

“Many retailers feel they’re fighting very hard just to stand still at best and don’t see any light at the end of the tunnel. However, there are retailers out there who deliver what the customer wants and needs – in terms of product, brand and price – which proves that if the proposition is spot on it is still possible to outperform the market and the competition.”

Reasons for optimism in the grocery market were also hailed by Joanne Denney-Finch, chief executive of food and drink analysts the IGD. She said: “These results are an improvement on January and a sign that consumer confidence is heading in the right direction. Our research shows that, although half of shoppers (47%) still believe they will be worse off in the year ahead, this is a more positive picture than last year, when 61% felt this way.”

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