The new year has started with an abrupt end to growth in the retail sector, as January sales fall sharply from the Christmas rushes.
New results from the BRC–KPMG Retail Sales Monitor have revealed that like-for-like sales in January fell by 0.6 per cent, compared to a 2.6 per cent growth in the same period a year before.
Total sales rose by 0.1 per cent in the same period, compared to a 3.3 per cent increase in January 2016, well below both the three-month average of 1.1 per cent and yearly average of 0.9 per cent.
“While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January,” British Retail Consortium (BRC) chief executive Helen Dickinson said.
“Looking across the last three months, we’ve seen the slowest growth of the festive period since 2009.
“Closer inspection reveals that this was driven by slowing sales in non-food sectors.”
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Food sales grew by 0.6 per cent in the three months leading the January on a like-for-like basis, and two per cent on a total basis, marking the second consecutive quarterly growth of two per cent.
Meanwhile non-food retail like-for-like sales rose by 0.2 per cent, alongside a total sales rise of 0.3 per cent. This shows the slowest growth since July 2012.
Chief executive of grocery research firm IGD Joanne Denney-Finch said: “Shoppers will be watching food prices closely.
“Two-thirds (65 per cent) believe food prices will have the biggest impact on their personal finances this year, ahead of energy bills (58 per cent), petrol prices (53 per cent) and interest rates (28 per cent).
“Some recent cost increases for producers have begun to take effect but with currencies in such a state of flux, the picture for later in the year is very hard to predict.”
Despite continuing growth in online sales, the rate has dropped considerably.
In January, online non-food sales rose by eight per cent, this is compared to a 14.9 per cent growth a year earlier and marks the first non-double-digit growth since the monitor began in 2012.
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On a three-month basis, non-food sales to January rose by 8.6 per cent year-on-year, compared with total sales of 0.3 per cent.
“Online channels achieved the highest share of total non-food retail spend on record in the three months to January, despite the eight per cent growth being somewhat below the trend of late,” Dickinson said.
“As with total sales, online sales in January were set against a strong comparative period, as January 2016 recorded the highest growth of last year.”
One pound in every £4 spent on non-food items in the three months to January was spent online, alongside a 22.9 per cent share of total non-food sales throughout January, up from 21.6 per cent a year earlier.
Online sales accounted for the highest ever level of year-on-year non-food growth, at 2.9 per cent in the three months to January. Conversely instore sales made a negative 2.6 per cent contribution in the same period, the lowest on record.