February sees unexpected retail sales growth

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February retail sales
// February retail sales up 0.4% by value and up 0.6% by volume – both month-on-month
// On a Y-o-Y basis, retail sales up 4.1% by value and 3.8% by volume.
// Analysts say the growth was unexpected given the Brexit uncertainty

Shoppers continued to spend in February, with an unexpected rise in retail sales indicating that consumer may be shrugging off Brexit uncertainty.

According to the latest monthly retail sales figures from the Office for National Statistics, sales by volume grew a marginal 0.4 per cent on the previous month, and by 0.7 per cent on the last quarter.

In value terms, sales grew 0.6 per cent on both the previous month and on the last quarter.

On a year-on-year basis, retail sales were up 4.1 per cent by value and 3.8 per cent by volume.

In the last three months, sales increased 3.9 per cent by value and 3.6 per cent by volume compared to the same period in 2018.

The ONS said unusually warm weather in February contributed to the rise in retail sales, with garden centres and sporting equipment enjoying a boost.

However, with food store sales declining 1.5 per cent – the strongest decline since December 2016 – shoppers appear to not be stockpiling ahead of Brexit as predicted.

Barclays head of retail Ian Gilmartin the latest ONS retail sales data was “another fairly strong set of numbers”, with “growth across most of the retail industry”.

“The underlying story in these figures is positive, with retailers somehow finding a way to keep us spending,” he said.

Deloitte head of retail Ian Geddes said: “February’s milder temperatures would have been welcome news to high street retailers with raw memories of last year’s ‘Beast from the East’.

“2019 continues to see a combination of strong employment, low interest rates, falling inflation, and rising household incomes.

“Despite these favourable economic fundamentals, consumer confidence will continue to be influenced by macroeconomic and political uncertainty.”

Fashion Retail Academy principal Lee Lucas echoed the comments from Geddes and Gilmartin.

“An unseasonably warm February brought consumers out of hibernation, contributing to an unexpected rise in retail sales at the start of the year,” Lucas said.

“Good weather and a fear of rising costs after Brexit will have undoubtedly helped this uplift in sales, but there’s more behind these figures than just the first blushes of spring.

“Retailers are increasingly honing their craft, luring customers to the high street with competitive pricing and blended shopping environments that marry the convenience of online shopping with the tangible experience of heading to a store.”

However, BRC head of insight Rachel Lund had a different view.

“Retail sales were fairly sluggish in February,” she said.

“Food sales growth was particularly hard hit, in part due to consumers buying extra provisions in February 2018 before the arrival of the ‘Beast from the East’.

“Non-Food sales were more robust, offering some relief for those retailers.

“With business rates due to rise once again on 1st April, retailers will see their already tight margins squeezed further.

“Unless government takes action to reform the broken business rates system we may see a repeat of 2018, where many household names disappeared from our high streets.”

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