Retail sales fall for first time in 6 years

Retail sales have started to decline, with quarterly non-food sales dropping for the first time since 2011.

New figures from the BRC-KPMG Retail Sales Monitor have found that in the four weeks to February 25 retail sales in the UK dropped by 0.4 per cent on a like-for-like basis. This is compared to a 0.1 per cent rise in the same period in 2016.

On a total basis, sales grew by just 0.4 per cent compared to February last year, where they grew nearly three times as quickly. This is half the quarterly average of 0.8 per cent and it‘s also below the yearly average of 0.9 per cent.

During the three months to February, non-food like-for-like sales fell for the first time in six years by 0.4 per cent, weighing down the yearly total growth average to the lowest point since 2012 at 0.6 per cent.

Conversely, food sales performed well during the quarter rising by 0.6 per cent, as well as two per cent on a total basis. As the third consecutive quarter of total growth above two per cent, the yearly average was boosted to 1.2 per cent total growth, the highest since May 2014.

“Overall growth was subdued in February driven by a continuation of the slowdown in non-food sales. This was marginally offset by slightly stronger growth in food sales,” British Retail Consortium (BRC) chief executive Helen Dickinson said.

“Tougher times are expected ahead. The impact of inflation on consumer spending will add further intensity to an already fiercely competitive environment in which the ability to adapt and innovate will be key to survival.

“Looking to the Budget this week, we hope to see a commitment from government to lay a path to a truly sustainable business rates system that will give retailers the flexibility needed to invest and support their local communities.”

READ MORE: January retail sales the worst in 34 years

Meanwhile, online sales provided a slightly more positive outlook, with non-food sales rising by eight per cent in February compared to a year prior, above the three-month average of 7.7 per cent as well as the yearly average of 9.3 per cent.

Despite this, on a three-month basis non-food online sales grew by 7.7 per cent year-on-year, marking the lowest three-month average since the monitor began.

Online sales accounted for 22.2 per cent of total non-food sales in February this year, up 1.2 per cent form a year prior.

On a quarterly basis, online sales also contributed 2.3 percentage points to total sales growth, whereas in-store sales saw a negative contribution of 2.5 percentage points.

KMPG‘s head of retail Paul Martin said: “Online retail sales in February provide further contrast to the poor performance noted on the high street. Non-food online sales are up eight per cent on last year and penetration rates remain stable at 22.2 per cent.

“Interestingly, many of the categories that failed to capture the attention of shoppers in store, did so online – including clothing and footwear. Carefully placed promotions and the shorter wait until pay day in February are likely to have nudged online shoppers to e-checkouts.

“In the run up to the Budget, online retailers will be eager to learn if the Chancellor looks to support the retail sector. The business rate rise has been hotly contested, given the varying impact the proposed changes will have on retailers utilising physical or online retail channels.”

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