The gap between non-food and grocery sales in the UK widened last month to push total like-for-like (LFL) trading into negative growth, it was revealed today.
According to new figures from the British Retail Consortium (BRC) & KPMG, total sales grew by 1.5 per cent year-on-year in August, compared to 2.8 per cent 12 months previously, but LFL sales for the whole retail sector decline 0.6 per cent.
Riots affecting towns and cities across the country at the beginning of the month had little impact on the overall numbers but continuingly low consumer confidence and wider economic concerns helped dampen spending, with sales of footwear and homewares products particularly low.
Stephen Robertson, Director General of the BRC, said: “The retail sector’s performance for August has been essentially flat, particularly bearing in mind the increase in VAT which will be responsible for some of the growth in spending.
“It remains a tale of two halves. The food sector has proved more resilient but non-food retail showed a marked decrease in sales year-on-year.”
With the summer sales starting early this year the clothing sector saw a diminished interest in the seasonal clothing lines during August, and despite mass discounts being an increasingly common site on the high street sales remained muted.
One positive in the figures was the performance of the online sector with non-food, non-store trading up 12.8 per cent year-on-year for the month, its highest growth since April this year.
In general however non-essential non-food items still remain a luxury too far for many UK consumers, and Robertson described margins as being “cut to the bone” on many big-ticket items due to the level of discounting occurring.
Helen Dickinson, Head of Retail for KPMG, warned that the “weaker sectors are really struggling”, and said that toiletries, cosmetics, and menswear were the only non-food sectors posting growth.
“The differential between food and non-food performance continues to grow with food sales in value terms remaining relatively resilient,” Dickinson added.
“Given that much, if not all, of the growth is inflation and a higher VAT rate versus last year, this isn’t particularly good news for retailers as they struggle to maintain their margins.
“Promotional activity remains high to drive footfall and interest which is a delicate balancing act for retailers to ensure the volume uplift compensates for the margin losses.”