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RetailX Brand Index 2019

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June retail sales fall amid Brexit uncertainty – and move further online: BRC

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June retail sales fall amid Brexit uncertainty – and move further online: BRC

Online sales grew last month – but overall retail sales fell as Brexit uncertainty bit, according to the British Retail Consortium. The BRC-KPMG Retail Sales Monitor for June found 12-month average growth to the lowest (+0.6%) it has yet recorded. The BRC is now calling on the next Prime Minister to find a solution that avoids a no deal Brexit falling on October 31, just before the peak trading period.

 

“Overall the picture is bleak,” said Helen Dickinson, chief executive of the BRC. “Rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases.

 

“Businesses and the public desperately need clarity on Britain’s future relationship with the EU. The continued risk of a no deal Brexit is harming consumer confidence and forcing retailers to spend hundreds of millions of pounds putting in place mitigations – this represents time and resources that would be better spent improving customer experience and prices. It is vital that the next Prime Minister can find a solution that avoids a No Deal Brexit on 31st October, just before the busy Black Friday and Christmas periods.”

 

Sales fall in-store as consumers shift spending online

Online sales of non-food products grew by 4% in June compared to the previous June, when sales were up by 8.5%. Longer-term figures point to continuing online sales growth, with ecommerce sales up by 3.3% over the three months to June, compared to the same time last year, and by 5% over the last year. In June 2018, online accounted for 30.7% of non-food retail sales. That’s up from 28.5% last year.

 

At the same time, in-store sales of non-food goods fell by 4.3% in total and by 4.1% on a like-for-like (LFL) basis, which strips out the effect of store openings and closures.

 

Paul Martin, partner and UK head of retail at KPMG, said shoppers had bought furniture on the high street, but otherwise “largely turned a blind eye to offers in the physical retail space”. He added: “With 4% online growth, shoppers were thankfully more engaged in this channel, making the most of the added convenience and continued aggressive pricing. Fashion performed particularly well thanks to end-of-season sales and upcoming holidays.”

 

Sales across channels

But falling in-store sales meant that across the whole of retail, sales fell by 1.3% in June in total, and by 1.6% LFL. A year earlier sales had grown by 2.3%. Over 12 months to June, retail sales were at their lowest since the index started in 1995, growing by 0.6%, while over the three months to June they were down by 0.1%.

 

Dickinson said that last month was the worst June on record, and suffered in comparison to last year’s hot weather and the World Cup. Sales of TVs, garden furniture and BBQs were all ldown.

 

Martin said: “Pressure on retailers continues to mount and is seemingly coming from all angles: economic, geo-political, environmental and behavioural. Consumer spend is only likely to fall further as things stand, and cost efficiency remains vital. The focus for most in the industry will be preservation and adaptation in order to see them through these tough times.”

 

Susan Barratt, chief executive of grocery analyst the IGD, said that food and grocery sales showed small but encouraging growth last month, compared to the previous year. “If the recent pick-up in temperatures is sustained, there’s hope for stronger figures in July. Shoppers feel slightly more positive at the moment, with the percentage expecting to become worse off financially in the year ahead falling from 32% in February to 27% today.”

 

Image: Fotolia

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