BRC - KPMG retail sales monitor November 2017
Covering the four weeks 29 October – 25 November 2017
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“November brought relief as growth in retail sales perked up after last month’s dip. Black Friday, the big retail event of the month, failed to fundamentally shift underlying trends in spending. Food sales were responsible for pretty much all the growth this month as higher prices continue to absorb more of the weekly shopping budget. Non-food sales - the focus of Black Friday –fell, as the squeeze on household incomes continues to impact discretionary spend.
“That’s not to deny that Black Friday was a significant event. Sales of non-food products that week were over 40 per cent higher than in the other weeks of the month, while it was the biggest week ever for non-food products online. However, rather than increasing overall sales, the event has shifted spending away from other parts of the festive period, and focusses shoppers’ attentions online and away from stores.
“There was a mixture of performances across the industry over Black Friday itself, with retailers reporting shoppers being tempted solely by generous promotions, but resisting other items. Gaming, wearable tech and ‘internet of things’ performed well, while toys, last year’s star performer, saw sales sharply down this year.
“This year’s Black Friday has demonstrated that in such a tough economic environment, consumers have become ever more careful, willing to wait and deploy their discretionary income only when they see an exceptional bargain. That heralds a challenging festive period ahead for retailers and shoppers alike.
“With current conditions likely to persist into next year, the Government needs to do all it can to support the UK’s consumers, not least by securing a fair Brexit for them in the forthcoming trade negotiations.”
Paul Martin, Head of Retail, KPMG
“Retailers will be wondering whether the juice is worth the squeeze, with Black Friday sales resulting in a meagre 0.6 per cent uptick in like-for-like growth, when compared to November last year. In what has been a difficult year for the industry, any growth is most welcome, but profitability is what remains paramount.
“Despite Cyber Monday falling outside November’s figures, sales growth was clearly more prominent online, with non-food online sales up 6.4 per cent on last year and penetration rates as high as 27.4 per cent. After previous in-store stampedes, it is clear that retailers are increasingly moving Black Friday away from the high street.
“New shoes as well as health and beauty products are what filled online baskets thanks to timely promotion, but surprisingly toys and baby equipment didn’t appear to make much headway. It’s most likely that growth in toy sales were simply overshadowed by the bumper sales growth recorded last year, rather than being overlooked completely.
“In what remains of this year, the difference between success and failure will be akin to retailers walking a tightrope. Retailers would be wise to focus on differentiation, personalisation and ensuring the availability of their products in the coming weeks.”
Joanne Denney-Finch, Chief Executive, IGD
“This reporting period, spanning from Halloween to Black Friday, is increasingly vital for retailers in its own right and not just as the precursor for Christmas. Grocery retailers will therefore be pleased that the robust sales trend continued throughout November.
“It has been a good year so far for grocery sales, although the final verdict hinges on the four weeks still to come. Christmas shopping could be a bit more spontaneous this year given that 60 per cent of shoppers say they usually end up buying unplanned products at this time, up from 53 per cent in 2016."
Notes to editors:
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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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