Solid sales fulled by food
Covering the four weeks 02 July 2017 to 29 July 2017.
• In July, UK retail sales increased by 0.9% on a like-for-like basis from July 2016, when they had increased 1.1% from the preceding year.
• On a total basis, sales rose 1.4% in July, against a growth of 1.9% in July 2016. This month’s growth is in line with the 12-month average.
• Over the three months to July, Food sales increased 2.3% on a like-for-like basis and 3.4% on a total basis. This is weaker growth against the 3-month average to June 2017 but stronger against the same three months to July 2016.
• Over the three-months to July, Non-Food retail sales in the UK decreased by 0.7% on a like-for-like basis and by 0.4% on a total basis. This is below the 12-month total average growth of 0.4%.
• Online sales of Non-Food products grew 8.3% in July, compared to 11.2% a year earlier. Over the three-months to July, Online sales of Non-Food products grew 7.8% while the 12-month average stands at 8.4%.
• Over the three months to July 2017, In-store sales declined 2.6% on a Total basis and 3.0% on a like-for-like basis.
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“Sales growth slowed in July from June. That said, given the strong performance of the same month the previous year, the figures are fairly solid. Closer inspection of the headlines however unveils some familiar challenges. The month’s growth was underpinned by food sales alone, while non- food sales relapsed into negative territory as the competition heats up over a shrinking pool of discretionary consumer spending power.”
“Despite the gloomy picture for non-food overall, there were some success stories. The Homewares category for instance, which lost out in the previous month to summer wardrobe purchases, moved to the top of the performance rankings. Meanwhile, a number of clothing retailers benefitted from some early interest in their newly launched autumn- winter ranges.”
“While online sales continue to outpace in-store growth, it is not one at the expense of the other. Successful retailers saw growth in the month across all channels as the make the most of their multi-channel proposition, with many upgrading their online offer to feed the trend of on-the-go shopping.”
“Against a backdrop of increased consumer borrowing and shrinking real wages, we can expect food to continue making the running for sales growth for the time-being, although driven more by price than volume, with non-food continuing to struggle. The tough outlook for customers means that ensuring that prices remain low and choice and confidence remains high lies at the heart of what a fair Brexit for consumers looks like. So ensuring tariff-free trade with the EU must be the focus for Government as it resumes negotiations at the end of this month.”
Paul Martin, UK Head of Retail, KPMG
“From afar, retail performance appears to have been stable in July, with total sales growing by 1.4% and both online and on the high street sales registering growth overall. Looking at the figures in more detail though, the food sector continues to perform strongly whilst non-food sales struggle. Food price inflation continues to play a role albeit this pressure is reportedly easing, however it’s also important to note that a major driver behind increased consumption is rising household debt.
“Bucking the overall trend in non-food, children’s footwear seems to have been a popular purchase, no doubt encouraged by the start of summer holidays. Elsewhere, the rainy month turned attention indoors, with furniture and home accessory sales benefiting. For online retailers, everyone appeared to be a winner, but once again health and beauty was a strong performer in the month.
“Interestingly, July retail sales diverge from the latest consumer confidence figures, which noted a downturn in consumer sentiment. This divide suggests that UK shopping patterns remain mixed, although with demand continuing to be weak, retailers would be wise to remain cautious.”
Joanne Denney-Finch, Chief Executive, IGD
"After June’s heatwave, retail sales growth cooled a little in July as the weather became more unsettled and food inflation eased slightly. However, the underlying sales trend remained positive with continuing year-on-year growth.
“From our ShopperVista research, four out of five shoppers (78%) expect food prices to keep rising over the next year. If Sterling remains generally stable and cost pressures ebb away, this may not be the case although in such variable economic conditions, it could still go either way.”
Notes to editors:
The BRC-KPMG Retail Sales Monitor measures changes in the actual value (including VAT) of retail sales, excluding automotive fuel. The Monitor measures the value of spending and hence does not adjust for price or VAT changes. If prices are rising, sales volumes will increase by less than sales values. In times of price deflation, sales volumes will increase by more than sales values.
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.
Total sales growth is the percentage change in the value of all sales compared to the same period a year earlier. The total sales measure is used to assess market level trends in retail sales. It is a guide to the growth of the whole retail industry, or how much consumers in total are spending in retail – retail spending represents approximately one-third of consumer spending. It is this measure that is often used by economists. Many retailers include distance sales as a component of total sales.
‘Like-for-like’ sales growth (LFL) is the percentage change in the value of comparable sales compared to the same period a year earlier. It excludes any spending in stores that opened or closed in the intervening year, thus stripping out the effect on sales of changes in floorspace. Many retailers include distance sales as a component of like-for-like comparable sales.
The like-for-like measure is often used by retailers, the city and analysts to assess the performance of individual companies, retail sectors and the industry overall, without the distorting effect of changes in floorspace.
Online (including mail order and phone) sales of non-food are transactions which take place over the internet, or via mail order or phone. Online sales growth is the percentage change in the value of online sales compared to those in the same period a year earlier. It is a guide to the growth of sales made by these non-store channels. It should be noted that online sales are still a small proportion of total UK retail sales. Estimates based on ONS figures show about 10 per cent of total UK retail sales (food and non-food) are achieved via the internet.
The responses provided by retailers within each sales category are weighted (based on weightings derived from the ONS Family Spending survey) to reflect the contribution of each category to total retail sales, thus making it representative of UK retail sales as a whole. Because the figures compare sales this month with the comparable period last year, a seasonal adjustment is not made. However, changes in the timing of Bank Holidays and Easter can create distortions, which should be considered in the interpretation of the data.
As well as receiving sales value direct from the retailers in the scheme the BRC-KPMG Retail Sales Monitor also receives food and drink sales value data from the IGD’s Market Track Scheme.
In its role as 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. 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 2 April 2000 and equivalent prior periods. The accuracy of the data is entirely the responsibility of the retailers providing it. The sponsorship role has been performed by KPMG since 10 April 2000 and the same for the aggregation of comparative sales figures for the period from 2 April 2000 it is not responsible for the aggregation of any data included in this Monitor relating to any period prior to 2 April 2000.
The commentary from KPMG is intended to be of general interest to readers but is not advice or a recommendation and should not be relied upon without first taking professional advice. Anyone choosing to rely on it does so at his or her own risk. To the fullest extent permitted by law, KPMG will accept no responsibility or liability in connection with its sponsorship of the Monitor and its aggregation work to any party other than the BRC.
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The data is collected and collated for the BRC by KPMG.
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