UK Retail Sales Up 0.6%

Michelle Remo, “Big 4″ observer
August 09, 2011 /

UK retail sales values were up by 0.6 percent on a like-for-like basis compared with the 0.5 percent rise in July 2010.

This was according to the BRC-KPMG Retail Sales Monitor that measures changes in the actual value (including VAT) of retail sales, excluding automotive fuel.

It also measures the value of spending and therefore does not depend on price or VAT changes.

The figure quite deviates from Deloitte’s survey results on November last year that stated higher taxes and public spending facing shoppers were likely to bring retail sales down by 2011 from its projected 1 percent rise during Christmas.

Deloitte strategic retail adviser Richard Hyman then described 2011 as a year of “flat sales growth in UK,” representing an achievement that could counteract a backdrop of decreased income and fading confidence among consumers.

On the other hand, KPMG now said sales volumes will increase by less than sales values if prices are rising.

“In times of price deflation, sales volumes will increase by more than sales values,” the global consulting firm added.

On a total basis, sales were up 2.5 percent, against a 2.6 percent increase in July 2010.

The Monitor showed food sales growth picking up in July after a poor June. In addition, clothing and footwear picked up after a tough June, aided by clearance sales.

“July was a better month than June, seeing an improving trend for the food sector and an uplift for clothing when the good weather finally kicked in,” said Helen Dickinson, Head of Retail, KPMG.

“However, retailers of big-ticket items continue to find the market conditions challenging, with customers still reluctant to make major spending commitments.”

Homewares were mostly down on a year ago and often promotion-led. Consumer caution continued to hit big-ticket housing-related purchases.

Non-food non-store (internet, mail-order and phone) sales growth bogged down after June’s clearance-led uplift. Sales were 9.6 percent higher than a year ago, compared with 11.5 percent in June and 11.3 percent in July 2010.

“July’s food and drink sales show some encouraging improvement, partly due to better weather towards the end of the month. The new wave of fuel-related promotions by supermarket retailers may have succeeded in bringing forward some purchasing,” said Joanne Denney-Finch, Chief Executive, IGD.

Denney-Finch noted that the latest ShopperTrack research showed 51 percent of people saying they are checking the price of every single item they put in their shopping basket.

“A similar number of shoppers are comparing prices between products and between stores. Food retailers, together with manufacturers, are responding with new ways to help shoppers keep to a budget via coupons, meal deals and price campaigns.”

On the other hand, Stephen Robertson, Director General, British Retail Consortium, said the outcome for non-food sales is “good” compared with that of the high street sales where non-food is “barely growing at all.”

“But it’s well down on the double-digit results we’ve seen for non-store sales in most of the months since we began this measure in October 2008,” he said.

“When you take into consideration inflation and January’s increase in VAT, 2.5 per cent growth effectively means people are buying fewer goods,” he added.

According to Robertson, non-food sales barely grew compared with food sales, though clearance events helped summer clothing in particular.

“But shoppers were only tempted into stores by an unprecedented number of promotions which come at the expense of margins,” he said.

Robertson added: ”Growing fears of a global economic slowdown and a sovereign debt crisis have sent shockwaves through financial markets.

“Policymakers in Europe and the US must act quickly to implement a coordinated and credible strategy to reduce public sector deficits while supporting growth. Business and consumer confidence needs to be restored quickly before spending paralysis sets in.”

“Apart from March, when sales were reduced by this year’s later Easter, this is the weakest growth for non-store sales of non-food goods for almost two years. The long-term progress of online retailing means internet shopper numbers and how much they’re buying continue to increase but the squeeze on household budgets is causing that to slow as people cut back where they can,” Robertson concluded.

As a sponsor of the BRC-KPMG Retail Sales Monitor, KPMG is responsible for the aggregation of the retail sales data provided by the retailers on a weekly basis. Retailers report the value of their sales for the current period and the equivalent period a year ago. These figures are reported both in total and on a ‘like-for-like’ basis.

This data consists of the relevant current week’s sales data and comparative sales figures for the same period in the prior year. The aggregation has been performed by KPMG on data for periods following April 2, 2000 and equivalent prior periods.

 

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