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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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Online sales grow half as fast in September as last year, while store sales continue their decline: BRC

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A greater proportion of retail sales took place online in September
A greater proportion of retail sales took place online in September
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Online sales grow half as fast as last year, while store sales continue their decline: BRC

Online sales grew half as quickly in September as they did a year earlier, while UK like-for-like retail sales fell by 0.2% in September in what the British Retail Consortium (BRC) describes as a "summer hangover". The fall prompted the BRC to renew its call, ahead of this month’s Autumn budget, for the Government to introduce a tax system that will treat high street retailers more fairly.

 

Ecommerce non-food sales grew by 5.4% during the month, according to the BRC-KPMG Retail Sales Monitor for September 2018. That’s down from growth of 10.7% a year earlier. September’s online growth, said the BRC, was the lowest seen since January and below both the three-month trend of 6.7% and the full-year trend of 7.1%. That said, almost a quarter of sales (24.2%) took place online last month – up from 22.7% a year earlier.

 

Total retail sales grew by 0.7%, down from growth of 2.3% a year earlier – again below the three-month (+1.2%) and 12-month (+1.3%) averages.

 

Helen Dickinson, chief executive of the BRC, said: "These figures lay bare the difficult operating environment for the retail industry. After a challenging August, constrained consumer spending in September has resulted in the weakest sales growth for five months.

 

"The retail industry pays a disproportionate amount of tax," she said. "It represents 5% of the economy but pays 10% of business tax and almost 25% of business rates. A tax system skews towards high taxes on people and property is contributing to stores closures and job losses and is stalling the successful reinvention of our high streets.

 

"Taxes apply to all businesses so the answer is not additional taxes solely on the retail industry. The Government urgently needs to reduce the business rates burden and create a tax system fit for the 21st century that more fairly distributes taxes right across the economy."

 

Once again, the figures showed falling in-store sales of non-food goods – down by 2.7% in total in the three months to September, and by 4% on a like-for-like basis. Over the last year, average total in-store sales fell by 2.7%.

 

Food sales, meanwhile, grew by 2.3% on a like-for-like basis that strips out the effect of store openings and closures, and by 3.4% in total in September – below the 12-month total average of 3.7%. Non-food sales fell by 1.6% LFL and by 0.6% in total.

Paul Martin, UK head of retail at KPMG, said: "Like-for-like retail sales in September were down 0.2 per cent on this time last year, but then last year consumers were remaining more defiant in the face of Brexit and shopping regardless.
"Grocery continued to perform, but growth in the category retreated in September. The non-food categories however, continued to disappoint. The historically reliable back-to-school push did not elevate apparel sales. Instead the latest tech launches were a rare source for optimism.
“Online retail continued to fare better. Even clothing sales managed to grab the attention of those browsing the web to refresh their wardrobe.
“The final golden quarter of the year marks the ultimate test for many players, but retailers must also successfully navigate: the upcoming government Budget, Black Friday, Christmas, and of course Brexit.”
Sales of computing, jewellery, furniture, home accessories and food were all up during the month, but sales of textiles, household appliances, clothing and footwear were all down.
Jon Woolven, strategy and innovation director at grocery analyst the IGD, said: "Shopper confidence has followed a downward path with those expecting to be financially better off over the year ahead dipping from 26% in July to 22% in September. Brexit-related uncertainty probably plays a part in this, so retailers will be hoping for a clear resolution ahead of the Christmas shopping season.”
Catherine Shuttleworth, chief executive of retail and shopper marketing agency Savvy, said: "Sluggish sales in September - especially in non food - demonstrate continued consumer caution. Clearly parents have still funded back to school shopping but they have done so by cutting back elsewhere. The continued warmer weather in September has probably held back purchases of new season clothing - but we think that many consumers are holding back waiting for Christmas shopping."

Meanwhile, Barclaycard analysis found that consumer spending grew by 3.9% year-on-year in September – and said spending was rebalancing after an "unusually strong summer". Petrol spending was particularly high (+8.9%) as fuel prices remained high.

Esme Harwood, director at Barclaycard, said: "We’ve seen spending return to a more modest level as consumers balance their budgets after a longer than usual summer of spend. Rising prices are having an impact on shoppers’ spending priorities, with more of their household budget devoted to everyday essentials such as petrol.

 

“Looking ahead, a more cautious approach looks set to continue into the Christmas period as consumers remain conscious of the wider economic trends. With this in mind, it’s clear that shoppers will seek out value for money purchases – whether that’s everyday essentials or those discretionary or ‘nice to have’ items.”

Image: Fotolia
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