The impact of the Beast from the East on shoppers’ spending was balanced by food buying ahead of Easter in a "rollercoaster" March that saw spending grow online and in-store, new British Retail Consortium (BRC) figures suggest.
Spending moved further online in the five weeks from February 25 to March 31, according to the BRC-KPMG Retail Sales Index for the month. It suggested that 22% of retail sales took place over the internet in March 2018, up from 20.6% a year earlier. Online sales of non-food products grew by an estimated 7.9% in March, against growth of 6.6% in March 2017.
Total UK retail sales, across all channels, are put at growth of 2.3% in March, while like-for-like (LFL) sales – which strip out the effect of store openings and closures – were up by 1.4%. In March 2017, both figures were down on the previous year.
But the growth mainly came in food sales, ahead of Easter. Spending on food grew by 5.3% in total in the three months to March, according to the BRC figures, and by 4.2% LFL. That’s the strongest three months since July 2009, and above the 12 month total average of 4.4%.
It was a very different story for non-food sales, where the three month figure showed a total 1% fall in sales, and a LFL fall of 1.8% - below the 12 month average of flat (0%) growth.
Helen Dickinson, chief executive of the BRC said: “March paints a volatile picture for sales, which experienced peaks and troughs to deliver some modest growth on last year. The positive distortion from the timing of Easter pushed sales up by over 15% during the holiday week compared with the rest of the month, only just making up for a sub-zero performance at the start of the month.
“There’s no doubt that the ‘Beast from the East’ and its successor played a significant role in deterring shoppers from making store visits. But it didn’t dampen consumers’ appetites towards food purchases, which saw the anticipated spike from the Easter festivities. This was in stark contrast to non-food sales which, despite some promotional- driven activity, bore the brunt of consumers’ disinterest in typical springtime purchases, as well as the ongoing spending squeeze on non-essentials."
Paul Martin, head of retail at KPMG said: “March was difficult for large parts of the UK retail industry. Seemingly endless cold weather dissuaded would-be shoppers from the high street and a number of retailers delivered bad news. Great hopes were placed on Easter trading, but whilst the latest figures point to overall improvement when compared to recent months, the Easter boost didn’t quite measure up to previous years.
“The divide between food and non-food sales became further pronounced, with food clearly the winner. This came at the expense of other categories, with few others noting growth.
“Retailers with an online presence were far more fortunate, with a marked lift in all categories. The cold weather clearly persuaded shoppers to peruse from the comfort of their own homes, with beauty and clothing grabbing the most attention.
“The start of 2018 has already seen a list of casualties, and with trading conditions unlikely to change in the short-term, retailers are increasingly having to be clear on their point of differentiation. It appears that unless you’re a grocer, bridging the gap between online and off-line sales offers the best means of success in this climate.”
Dickinson suggested that as the gap between inflation and wage growth narrows, consumers may return to spending next year. But, she said, Brexit negotiations would be important in that.
"With the success of Brexit as the determinant of what we pay for products in 2021, the deal negotiated in the next six months needs to focus on reducing potential customs friction on the movement of goods between the UK and EU-27," she said.
Joanne Denney-Finch, chief executive of grocery analyst IGD, said bad weather conditions had added complexity to the current understanding of retail sales.
“Despite this, UK grocery retailers reported growth last month," she said. "Price change continues to provide some support, but there are now signs that inflation is slackening, both in the grocery market and wider economy. This, coupled with rising wages, may encourage shoppers to spend more as the year progresses.
“For now, IGD’s most recent ShopperVista data suggests that most remain cautious about economic outcomes. Value-seeking behaviour is actually becoming more common, with 46% of shoppers saying they always look for the cheapest products even if it takes time to find them (up from 40% in March 2017).”
Heather Barson, director of retail and hospitality at Fujitsu UK and Ireland, said: “March’s growth in sales is of course is positive news for the industry. Most notable perhaps is the steady increase we are seeing in the proportion of sales originating from online. In line with recent annual figures from the likes of Ted Baker, this clearly emphasises the fact that consumers are increasingly opting to shop via more digital channels. It’s up to retailers to create an equally engaging in-store experience, to complement their online offering and engage customers across every channel.
She added: “Shopping in-store is now very much experiential, and by bringing innovative new ways to shop, retailers can enhance that experience to make it more interactive, digitally enabled and help to boost their sales and loyalty base. If retailers want to see success, they cannot deny consumers’ desire for technology and need to embrace digital innovations. Retailers need to think about how they can apply this to their whole experience, from online, mobile, to in-store."