Early summer sales helped total retail trading climb 1.5 per cent year-on-year in June, according to new figures published today.
The latest British Retail Consortium (BRC) & KPMG retail sales monitor revealed a growth in trade for the industry last month, after three of the last four months experienced declines compared to the same periods in 2010.
Whilst clothing & footwear trading for the beginning of the summer sales disappointed, due to busy summer range shopping during the unseasonably warm April, but sales of small homewares items were significantly boosted by discounting and promotions during the month.
Although an improvement year-on-year, the 1.5 per cent rise was still modest compared to the 3.4 per cent increase seen in June 2010 and BRC Director General Stephen Robertson argues that business remains difficult for many retailers.
“Given June’s spate of shop closure announcements and weak company results, these figures are not as bad as they could have been but it shows just how tough times are when total sales growth of 1.5 per cent is regarded as not that bad,” he said.
“And remember, the higher VAT rate is making the year-on-year comparison look better than it really is, while retailers are coping with higher costs because of increased utility bills, rates and the burden of regulation.”
Even though consumers have been encourage to spend by the large number and value of offers available on the high street, discounting is hurting retailer’s margins and with energy bills set to rise and rents still cripplingly high the situation look set to remain challenging over the coming months.
A number of retailers including Habitat and TJ Hughes fell into administration during June and many others are currently looking to cut back on store numbers in order to reduce overheads.
Whilst growth in online, mail-order and phone sales improved during the period, up by 11.5 per cent year-on-year, but big-ticket items are still being neglected by consumers eager to limit their spending.
Helen Dickinson, Head of Retail, KPMG, said: “Across non-food, it was a better month than May. But we are certainly not out of the woods yet, as highlighted very starkly with the demise of a number of well-known brands during the course of June.
“All sectors, except women’s clothing and footwear, achieved an improved performance. Food prices, and to a lesser extent non-food prices, continue to rise given the ongoing cost price pressures.
“Inflation and a higher level of VAT (20 per cent this June and 17.5 per cent last) is included in the measured sales value, and hence underlying volumes of sales continue to fall.”