BRC warns retailers “need to be savvier than ever” as new ONS retail sales figures show challenging year ahead

The Office for National Statistics (ONS) has released its latest findings for UK retail sales for the period 31 December 2017 to 27 January 2018.

The latest stats show that in January 2018, the underlying pattern in retail sales is one of slow growth with the quantity bought increasing by 0.1%; the lowest growth since April 2017.

The monthly growth rate for the quantity bought increased by 0.1% with declines across all main sectors except non-food stores. When compared with January 2017, the quantity bought in January 2018 increased by 1.6%; a slowdown to year-on-year growth when compared with an increase of 2.4% in January 2017.

The main contribution to the year-on-year growth came from non-food stores, with sports equipment, games and toys increasing sales in the quantity bought in this sector by 10.9%.

ONS reports that feedback from retailers suggested that New Year’s resolutions to “get fit and lose weight” contributed to this increase of sales when compared with the previous year.

“Retail sales growth was broadly flat at the beginning of the New Year with the longer-term picture showing a continued slowdown in the sector. This can partly be attributed to a background of generally rising prices,” said Rhian Murphy, Office for National Statistics Senior Statistician.

Focusing on non-food stores, ONS found that they contributed 1.1 percentage points to the overall growth of 1.6% in the quantity bought for January 2018. Non-food stores had the largest weight in total retail sales, with 42 pence in every British pound spent in this sector.

Looking at online sales, there was a decrease in the internet’s proportion of all seasonally adjusted retailing in January 2018 when compared with December 2017; accounting for 16.5% of all retail. This was, however, an increase on the January 2017 figure of 15.8%.

Commenting on the ONS retail sales figures, Rachel Lund, Head of Retail Insight and Analytics at the BRC said: “Today’s figures represent what is likely to become the norm over the coming year. Growth in the both the quantity and value of goods held steady in January on previous months, but at very low levels by historical standards.

“The fact is that consumers’ incomes simply aren’t increasing fast enough to support levels of sales growth that we’d become used to. Last year, households were able to dip into reserves to support purchasing levels, despite the pressures on household incomes. However, with household saving rates reaching new lows, that is no longer an option, so we’re likely to see sales move much more closely in line with earnings.

“All of this signals another challenging year for retailers. With greater competition for households’ increasingly precious discretionary spending, retailers will have to be savvier than ever in offering great products and great value to consumers.”

About Laura Barnes 231 Articles
Founder/Publisher of UK musical instrument industry publication MI Focus.