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Retail sales “subdued” in February

Published: 7 March 2017 - Jenny Wonnacott

UK retail sales fell by 0.4% on a like-for-like basis in February compared with the same month last year, when they had increased by 0.1% from the previous year.

Retailers suffered a slow February, and are facing “tough times ahead” according to the BRC
Retailers suffered a slow February, and are facing “tough times ahead” according to the BRC

The figures come from the British Retail Consortium, which said the “subdued” month was down to a decline for non-food retailers, which was only marginally offset by a slight increase in food sales. On a total basis, sales rose 0.4% in February against a 1.1% increase in February 2016.

The results remain below the three-month average of 0.8% and the 12 month average of 0.9%. Over the three months to February 2017 non-food retail sales declined by 0.4% like-for-like and 0.2% on a total basis. This is the first three-month decline since November 2011, dragging the 12-month total average growth to 0.6%, the lowest since May 2012.

Online sales of non-food goods grew by 7.7% in the three months to February 2017, while in-store sales declined 2.4% total and 2.6% like-for-like.

Said BRC chief executive Helen Dickinson OBE, “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.

There was some negative distortion created by the later timing of Mother’s Day this year, which meant that some categories, notably women’s accessories and health and beauty, didn’t benefit from the build-up of gift purchases as they did last year. But looking beyond this distortion, the persistent weak sales performance of several non-food categories points to an undeniable trend of cautious spending on non-essential items.

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.”

KPMG head of retail Paul Martin added, “Evidently February was yet another challenging month for the majority of retailers, with like-for-like sales down 0.4 per cent on last year. Food sales however, continued to buck the general trend by remaining in the black. That said, with inflation starting to have an impact on retail performance, it is clear that consumer confidence is showing signs of deteriorating.

School half-term holidays are likely to have contributed to the stronger performance in children’s toy sales during the month. Likewise, furniture and home textile sales will have benefited from parents using the holiday as an opportunity to spruce up the home.

Retailers will be paying close attention to the upcoming Spring Budget in the hope of seeing some measures to ease the pressure being placed on margins. For some bricks and mortar retailers, a hike in business rates may well be the straw that breaks the camel’s back.”

Source: BRC


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