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Sales rise in April but retailers still struggling

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Retail sales excluding petrol rose by 1.2 per cent month-on-month in April, according to the latest data from the Office for National Statistics (ONS), but industry experts suggest the high street is someway from being healthy.

The ONS figures indicate that year-on-year sales volumes were up 2.7 per cent, with grocery and fashion retailers performing well during an unseasonably warm month full of bank holidays and the royal wedding of Prince William and Kate Middleton.

The seasonally adjusted value of retail sales in April 2011, which includes automotive fuel, rose by 6.2 per cent compared year-on-year, while volumes increased 2.8 per cent.

Barry Knight, Head of Retail at accountancy and business advisory firm Grant Thornton, warned however that by taking a closer look at the figures it is clear that April’s sales growth may just represent a short-term boost to the industry.

“I would express a word of caution about these figures as I don’t think they tell the full story of the state of the retail sector’s health,” he explained.

“If you dissect the figures, I believe the warm weather, which has driven sales of fashion, garden, and outdoor goods to name a few, has kept sales flat at best in real terms.

“With inflation running at around 4.5 per cent and the royal wedding accounting for an uplift of two per cent - i.e. 6.5 per cent - the reported number of 6.2 per cent, seasonally adjusted, in real terms could be negative by 0.3 per cent.”

ONS data showed that the predominantly food sector experienced year-on year growth for the first time in 15 months in April, with sales up 1.4 per cent and 6.1 per cent by volume and value respectively.

Grocery giant Asda yesterday became the latest retailer to suggest that the royal wedding provided a boost to trading in April, with other food specialists already having noted an increase in sales of items like barbeque food and other outdoor goods.

The ONS itself admits that April was an “unusual month” and revealed that further analysis is being undertaken on the impact the weather and holidays had on trading, with a report due to be published in July.

Knight commented: “There are still bumpy times to come and I believe conditions will get worse before they get better.

“Retailers will have to do what they can to ride through to recovery by adapting their strategies to suit customer demand and focussing on the product lines that are doing well while managing working capital, in particular stock levels.

“There is likely to be more misery to come on the high street.”

Published on Thursday 19 May by Editorial Assistant
Tags: ONS ONS

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