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High street retail names could soon disappear unless the Government takes action to avoid a no-deal Brexit, warns the BRC

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Household names could disappear from the UK high street this year unless the Government works with parliamentarians to find a Brexit deal that can be approved by the House of Commons, the British Retail Consortium (BRC) warned today.

“Unless the Government wants to see well-known brands disappearing from our high streets in 2019, they should work with their colleagues in Parliament to find a solution that avoids the shock of a no deal Brexit on 29 March and removes the risks to UK consumers,” said BRC chief executive Helen Dickinson.

The comments came as the BRC published retail sales figures showing modest growth online and offline in January 2019, which appeared to be driven by seasonal January discounting. Total sales, across all sales channels, grew by 2.2% in January, while like-for-like sales – which strip out the effect of store, and business, openings and closures –  were up by 1.8% from January 2018. While slow, the total growth was the highest seen since June 2018, and above the longer-term 12-month (+1.2%) and three month (+0.8%) trends.

Online sales of non-food products were up by 5.4% in January. Last January they grew by 5.3%. This January’s figure is above the three-month trend (+4.8%) but below the 12 month (+7%). The three-month trend is the lowest since the BRC index first measured online sales in December 2012 – despite the fact that the proportion of retail sales taking place online hit 29.4%, up from 28.2% in January 2018.

In-store non-food sales, meanwhile, fell by 2.6% in total, and by 3.2% on a like-for-like basis. That’s below the 12 month average decline of 2.3%. 

Dickinson said: “There was a welcome return to growth this month after December’s disappointing sales figures. But while retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished. And it will not just be brick-and-mortar stores looking nervously to the future, as online sales continued to grow below the long-term trend.”

The fastest January growth came in the furniture, food, jewellery and watches, and household appliances categories, but sales of health and beauty, footwear, house textiles and stationery were all down. 

Paul Martin, UK head of retail at KPMG, said: “Following the worst December trading performance in a decade, January brought a welcome improvement with total retail sales up by 2.2%. Having said that, this increase points more to British shoppers’ obsession of bagging a bargain and price inflation, rather than any real improvement, and these peaks and troughs continue to leave retailers feeling increasingly anxious.

“The colder weather and continual discounting drove up fashion sales whilst the increased focus indoors also boosted furniture sales. However, not all categories or players have been so fortunate, and even online growth continued to slow.

“Eyes are naturally fixed who the next casualty will be, but we can’t afford to overlook those excelling despite adverse conditions. Winning retailers remain attractive to investors and consumers; thy are adaptive and agile, and ultimately they continue to outperform in this rapidly evolving market.” 

Susan Barratt, chief executive of grocery analyst the IGD, said food and grocery sales held up reasonably well in January. “Looking to shopper sentiment, we’re seeing polarisation in views on quality vs. cost. Whereas 14% say they would put a greater focus on quality in their food shopping this year, up from 12% in December, another 20% expect to focus more on price. This compares with 17% from the previous month.”

Younger entrepreneurs more optimistic about the future, says eBay research

Meanwhile, eBay says that its latest Small Business Barometer finds that despite being widely portrayed as the age group most concerned about the UK’s exit from the EU, over three-quarters (76%) of 18 to 34-year-old owners of small and medium business are optimistic about their business’ growth prospects in 2019, compared to just over a third (37%) for older entrepreneurs (aged 35+).

The figures, based on research conducted by Populus, also found that, overall, SMEs who feel optimistic about the future outnumber pessimists by two to one. Some 43% of the businesses surveyed said they are positive about growth in 2019, compared to just 22% who say they are not.

Nonetheless, when asked by researchers to name the risks that could hold back growth this year, 32% of businesses said Brexit, while 26% pointed to a reduction in consumer spending, business worries about an unpredictable political or economic incident (24%), being undercut by big businesses offering similar products (16%) and concerns about a weak pound making imports more expensive (15%).

Rob Hattrell, vice president of eBay in the UK, said: “Clearly there are economic risks in 2019, with Brexit and consumer confidence chief among the concerns, but we see that small retailers have the flexibility to adapt and thrive. The businesses we are working with in Wolverhampton grew revenues by 41% in the first three months of our Retail Revival partnership, showing how offline and online retail can work together.”

Image: Fotolia

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