ROLLER COASTER RIDE IN RUN-UP TO EASTER
Covering the five weeks 25 February – 31 March 2018
· In March, UK retail sales increased by 1.4% on a like-for-like basis from March 2017, when they had decreased 1.0% from the preceding year.
· On a total basis, sales rose 2.3% in March, against a decline of 0.2% in March 2017. This is above the 3 month and 12-month averages of 1.8% and 1.9% respectively, but is positively distorted by the timing of Easter.
· Over the three months to March, In-store sales of Non-Food items declined 3.0% on a Total basis and 4.0% on a Like-for-like basis. On a 12-month basis, the Total decline was 2.2%.
· Over the three months to March, Food sales increased 4.2% on a like-for-like basis and 5.3% on a total basis. This is the strongest 3-month average since July 2009 and above the 12-month Total average growth of 4.4%, which itself is the highest since March 2012.
· Over the three-months to March, Non-Food retail sales in the UK decreased 1.8% on a like-for-like basis and 1.0% on a Total basis. This is below the 12-month Total average decrease of 0.0%.
· Online sales of Non-Food products grew 7.9% in March, against a growth of 6.6% in March 2017. This is above the 3-month and 12-month averages of 6.6% and 7.8% respectively. Online penetration rate increased from 20.6% in March 2017 to 22.0% in March 2018.
Paul Martin, Head of Retail, KPMG
“March was difficult for large parts of the UK retail industry. Seemingly endless cold weather dissuaded would-be shoppers from the high street and a number of retailers delivered bad news. Great hopes were placed on Easter trading, but whilst the latest figures point to overall improvement when compared to recent months, the Easter boost didn’t quite measure up to previous years.
“The divide between food and non-food sales became further pronounced, with food clearly the winner. This came at the expense of other categories, with few others noting growth.
“Retailers with an online presence were far more fortunate, with a marked lift in all categories. The cold weather clearly persuaded shoppers to peruse from the comfort of their own homes, with beauty and clothing grabbing the most attention.
“The start of 2018 has already seen a list of casualties, and with trading conditions unlikely to change in the short-term, retailers are increasingly having to be clear on their point of differentiation. It appears that unless you’re a grocer, bridging the gap between online and off-line sales offers the best means of success in this climate.”
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“March paints a volatile picture for sales, which experienced peaks and troughs to deliver some modest growth on last year. The positive distortion from the timing of Easter pushed sales up by over 15 per cent during the holiday week compared with the rest of the month, only just making up for a sub-zero performance at the start of the month.
“There’s no doubt that the ‘Beast from the East’ and its successor played a significant role in deterring shoppers from making store visits. But it didn’t dampen consumers’ appetites towards food purchases, which saw the anticipated spike from the Easter festivities. This was in stark contrast to non-food sales which, despite some promotional- driven activity, bore the brunt of consumers’ disinterest in typical Springtime purchases, as well as the ongoing spending squeeze on non-essentials.
“There is hope that, with the gap between inflation and wage growth finally narrowing, consumers’ purse strings will slacken to some extent. But the grip on spending power will persist over the course of the year.
“So with the success of Brexit as the determinant of what we pay for products in 2021, the deal negotiated in the next six months needs to focus on reducing potential customs friction on the movement of goods between the UK and EU-27.”
Joanne Denney-Finch, Chief Executive, IGD
“Spring performance is often hard to judge, with varying Easter dates making for difficult year on year comparisons. The bad weather conditions businesses have faced this season add further complexity - April trading may give us a clearer picture.
“Despite this, UK grocery retailers reported growth last month. Price change continues to provide some support, but there are now signs that inflation is slackening, both in the grocery market and wider economy. This, coupled with rising wages, may encourage shoppers to spend more as the year progresses.
“For now, IGD’s most recent ShopperVista data suggests that most remain cautious about economic outcomes. Value-seeking behaviour is actually becoming more common, with 46 per cent of shoppers saying they always look for the cheapest products even if it takes time to find them (up from 40 per cent in March 2017).”
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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