FOOD AND FANS FOR JULY, BUT FURNITURE FORGOTTEN
Covering the four weeks 1 July – 28 July 2018
- In July, UK retail sales increased by 0.5% on a like-for-like basis from July 2017, when they had increased 0.9% from the preceding year.
- On a total basis, sales increased 1.6% in July, against an increase of 1.4% in July 2017. This is below the 3-month average of 2.7%, but in line with the 12-month average of 1.6%.
- Over the three months to July, In-store sales of Non-Food items declined 1.0% on a Total basis and 2.4% on a Like-for-like basis. This is higher than the 12-month Total average decline of 2.5% and the best Total 3-month average since June 2017.
- Over the three months to July, Food sales increased 3.1% on a like-for-like basis and 4.5% on a total basis. This is above the 12-month Total average growth of 3.8%. The monthly performance was the
highest since July 2013, excluding Easter distortions.
- Over the three-months to July, Non-Food retail sales in the UK increased 0.2% on a like-for-like basis and 1.2% on a Total basis. This is higher than the 12-month Total average decrease of 0.2% and the best 3-month average since June 2017. However, after two months of growth, July sales were back in decline.
- Online sales of Non-Food products grew 7.5% in July, against a growth of 8.3% in July 2017. This is below the 3-month and 12-month averages of 9.2% and 7.9% respectively. Online penetration rate increased from 22.4% in July 2017 to 24.1% in July 2018.
Paul Martin, UK Head of Retail, KPMG
“For all the hopes placed on the World Cup and the glorious weather, it seems retail sales still fell short of expectations, growing only 0.5 per cent on a like-for-like basis in July 2018. It was perhaps just too hot to hit the high street!
“Unsurprisingly, food & drink fuelled the majority of sales growth thanks to summer BBQs, picnics and football festivities, whilst elsewhere growth was mainly witnessed among the holiday essential categories, including health & beauty, deck chairs and fashion. This was particularly true when comparing the high street to online, with the latter faring considerably better.
“July’s performance reinforces the fact that it will take more than events-based retail and sunshine to improve the health of the high-street. Retailers must improve efficiency, in many cases reinvent themselves and adapt to the changing retail environment, including last week’s interest rate rise.”
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“Last month’s sweltering temperatures kept shoppers focussed on eating, drinking and keeping cool. Food sales had their best July in five years, while fans and cooling equipment flew off the shelves.
“However, total sales growth slowed as the heat laid bare the underlying weakness in consumer spending. Sales of non-food products struggled - three months into an extended period of summer weather, demand for many seasonal purchases has slowed while the heat has kept shoppers away from days spent browsing new ranges. For many in the industry, Autumn could not come sooner.
“Although the weather generates a shift in month-to-month spending, trend growth remains very low by historical standards. Physical stores have been particularly affected by pressures on consumers while costs borne by retailers have continued to rise. Over the last year, in-store sales of non-food products fell 2.5 per cent, at the same time as business rates bills increased nearly 3 per cent.
“Although changing consumer behaviour means we will have fewer shops in future, the reality is that if we want to support a positive reinvention of our high streets, business rates cannot go on increasing.”
Food & Drink sector performance | Joanne Denney-Finch, Chief Executive, IGD
“July’s food and grocery sales were a reason to celebrate after the best year-on-year uplift since July 2013. Beverages fared best of all thanks to England’s World Cup Semi-Final appearance and exceptionally hot weather throughout.
“Although the short to medium term outlook involves a lot of uncertainties, most shoppers are optimistic for the longer term. 60 per cent are looking forward to the future and 72 per cent are hopeful that their lives will be better.”
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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