April confirms down trend in non-food retail sales
Covering the four weeks 1 – 28 April 2018
· In April, UK retail sales decreased by 4.2% on a like-for-like basis from April 2017, when they had increased 5.6% from the preceding year.
· On a total basis, sales declined 3.1% in April, against an increase of 6.3% in April 2017, both distorted by the timing of Easter. This is below the 3-month and 12-month averages of 0.4% and 1.2% respectively and the sharpest decline recorded by our monitor since its inception in January 1995.
· Over the three months to April, In-store sales of Non-Food items declined 3.8% on a Total basis and 4.9% on a like-for-like basis. This sets a record low since this measure began in January 2013. On a
12-month basis, the Total decline was 2.9%, another record low.
· Over the three months to April, Food sales increased 1.7% on a like-for-like basis and 3.0% on a total basis. This is below the 12-month Total average growth of 3.5%, suggesting growth has peaked,
since inflation started to recede.
· Over the three-months to April, Non-Food retail sales in the UK decreased 2.4% on a like-for-like basis and 1.6% on a Total basis, the lowest since March 2009. This is below the 12-month Total average decrease of 0.6%, itself the lowest since September 2009.
· Online sales of Non-Food products grew 6.7% in April, against a growth of 10.3% in April 2017. This is below the 3-month and 12-month averages of 7.1% and 7.5% respectively. Online penetration rate
increased from 20.8% in April 2017 to 22.0% in April 2018.
Paul Martin, Head of Retail, KPMG comments:
“April’s figures show retail sales growth falling off a cliff, with sales down -3.1 per cent on last year, but we must exercise caution and remember that the timing of Easter makes meaningful month-on-month comparisons difficult. That said, the three-month average is more helpful to assess, but this too points to sales only growing modestly – these are indeed testing times for retailers!
“April saw all seasons rolled into one, from a dreary and wet Easter to more welcome sunny spells. Fashion sales received a much-needed boost, but otherwise the sales were disappointing for the rest of the high street.
“Online retail once again bucked the overall trend, with growth in all categories except toys and baby equipment. Like the high street, it was clothing and footwear that benefitted most.
“Retailers have got their work cut out to overcome seemingly endless obstacles, whether it be unpredictable weather or the introduction of new regulation, like GDPR. The upcoming months will provide a number of opportunities for retailers to drive sales and navigate this assault course, including Bank holidays, World Cup and of course the Royal wedding, although it is clear that trading will remain challenging.”
Helen Dickinson OBE, Chief Executive, British Retail Consortium comments:
“A drop in sales this April, compared to last, was almost inevitable given the earlier timing of Easter. With much of the spending in preparation for the Bank Holiday weekend falling in March this year, a record low in sales growth, in contrast to last year’s record high, does not come as a surprise. However, even once we take account of these seasonal distortions, the underlying trend in sales growth is heading downwards.
“The first glimpse of summer may have temporarily lifted clothing and footwear, but non-food sales overall continue to be weak. Consumers’ discretionary spending power remains under pressure and the reality is, that with only a gradual return to solid growth in real incomes expected, the market environment is likely to remain extremely challenging for most retailers.
“The retail industry is undergoing an unprecedented period of change the impact of which is being laid bare for us all to see across the nation's high streets. Retailers are reacting to this change to ensure it represents a positive reinvention of our industry, investing in technology and innovation and providing digital training to employees to improve the customer experience."
Joanne Denney-Finch, Chief Executive, IGD
“Although food and grocery sales took a dip in April, this is fully explained by the fluctuating date of Easter. Combining the last two months to remove this effect, reveals a slight increase on last year of just over two per cent.
“This was another solid result for the sector, especially given the drop in food inflation. Retailers will hope for a buoyant May, boosted by the royal wedding and presumably, some sunnier weather. However, shopper sentiment is finely balanced with 17 per cent intending to concentrate on making savings from their groceries versus 15 per cent intending to focus more on quality.”
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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 ‘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.
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