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Online sales growth slows, says BRC

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Recent rapid growth in online sales slowed significantly in July, according to figures published today.

While the BRC-KPMG Retail Sales Monitor reported fast growth in internet, mail and telephones sales in both May (21.(%) and June (17.3%), growth for July fell back to a somewhat less impressive 11.3%, compared to the same month last year.

Stephen Robertson, director general of the British Retail Consortium, said: “Eleven per cent growth is not to be sniffed and the comparison is with last year’s second strongest month but, in the context of non-store retailing’s rapid growth, it’s disappointing. This is well below the average for the last 12 months and the worst sales growth since last August.

“Economic conditions are better than a year ago, but recent falls in consumer confidence reflect customers’ mounting nervousness about making major spending commitments.”

Overall, the BRC monitor showed that UK retail sales rose by 0.5% on a like-for-like basis, compared to last July. Total sales rose by 2.6%.

Food sales showed growth, but homewares fell back. Big ticket items in particular were hit as consumers became less certain about job security and about their future income prospects. Clothing sales were boosted by clearance deals, but footwear sold more slowly.

“These are poor results for non-food retailing, with some sectors actually seeing sales falls,” said Robertson. “The vitality has even faded from online sales growth.” He added: “Talk of public spending cuts is unsettling customers and they are concentrating on essentials. It is clear the recovery continues to need support. The Bank of England must resist pressure to increase interest rates too soon.”

Helen Dickinson, head of retail at KPMG, said: “Summer sales, some of which started earlier this year, did little to entice consumers back in any decisive way as confidence has been affected by concerns over the future impact of fiscal changes – but spending at least continues to hold up and is likely to do so, at least until the effects of Government measures begin to hit people’s pockets.”

Scott Lester, chief executive of online retail content firm Flixmedia, said there was no need to panic yet, in response to the news. "It’s too early to start pressing panic buttons," he said. "Last year saw similar dips in the figures so perhaps this is seasonal and a post-World Cup malaise. The IMRG Capgemini e-Retail Sales Index reported in June 2009 a similar blip for online retail but the sector recovered strongly after the summer.

"Non-food vendors and retailers are not losing sleep. They are investing heavily in improving the shopping experience using new technologies such as augmented reality to attract and interest consumers. This is not a market at the mercy of public spending cuts."

Meanwhile, the report came hard on the heels of a BDO High Street Sales Tracker that showed the strongest high street sales growth for the last five summers in July. It saw overall sales grow by 5.2% for medium-sized retailers, while fashion sales rose by 5.1%. Don Williams, head of retail at BDO LLP, said: “Our prediction that trade will remain strong for the rest of the year is borne out in these figures. Although macro trends point to a retail slowdown, we are yet to see this reflected on the high street. Retailers will be pleased to see that, despite reports to the contrary, confidence among consumers remains high.”

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