The BRC – KPMG Retail Sales Monitor, which covers the four weeks from 28th January to 24th Febuary, reports that UK retail sales increased by 0.6% on a like-for-like basis from February 2017.
Over the three months to February, in-store sales of non-food items declined 2.4% on a total basis and 3.3% on a like-for-like basis. On a 12-month basis, the total decline was 2.2%.
Online sales of non-food products grew 6.4% in February, against a growth of 8.0% in February 2017. However, this is below the 3-month and 12-month averages of 6.5% and 7.7% respectively.
“The headwinds to retail spending continued to blow strong in February. Inflation is still eating into shoppers’ budgets, pushing them to spend a greater share of their income on essentials and leaving less left over to buy discretionary, predominantly non-food, retail items. At the same time, weak growth in household earnings is keeping overall sales low,” commented Helen Dickinson OBE, Chief Executive of the British Retail Consortium.
“With the upward pressure on prices from the fall in the pound now starting to subside we expect to see some loosening of the squeeze on spending on non-essentials, but it’s likely to come slowly. And so are anticipated increases in wage growth. Crucial for consumers and retailers over the coming months will be a successful outcome to trade negotiations, ensuring that amidst the current difficulties, they won’t be facing further increases in costs from new tariffs on the everyday goods we import from the EU.”
Paul Martin, Head of Retail at KPMG, added: “Retailers experiencing any growth in this environment will be counting themselves lucky. Indeed, total growth of 1.6 per cent in February is quite an achievement in such testing times. Softening consumer demand, rising costs for retailers and of course the ongoing structural changes within the industry, are creating the perfect storm which is uprooting the weakest players.
“On the high street, it was grocery sales that continued to pull it out of the bag. Meanwhile, Shrove Tuesday may have resulted in an uptick in cooking accessory sales, but performance in non-food in general was once again disappointing.
“Online retail appeared to have fared better – with growth across all categories – but the latest figures reinforce an underlying trend of a slow-down in growth online, which prompts concern.
“The retail shakeout will gather further momentum in the coming months, and retailers with large physical store estates are particularly under pressure. Moreover, the cost of one of the coldest winters on record has yet to be factored in. It’s not all doom and gloom though, a number of retailers are bucking the overall trend by focussing on a differentiated proposition whilst remaining relevant to the customer.”