More tricks than treats for retailers in October
Covering the four weeks 30 September – 27 October 2018
- In October, UK retail sales increased by 0.1% on a like-for-like basis from October 2017, when they had decreased 1.0% from the preceding year.
- On a total basis, sales increased 1.3% in October, against an increase of 0.2% in October 2017. This is above the 3-month average of 1.1%, but below the 12-month average of 1.4%.
- Over the three months to October, In-store sales of Non-Food items declined 2.0% on a Total basis and 3.3% on a Like-for-like basis. This is above the 12-month Total average decline of 2.4%.
- Over the three months to October, Food sales increased 1.2% on a like-for-like basis and 2.3% on a total basis. This is below the 12-month Total average growth of 3.5%.
- Over the three-months to October, Non-Food retail sales in the UK decreased 1.0% on a like-for-like basis and increased 0.1% on a Total basis. This above the 12-month Total average decrease of 0.2%. October Non-Food sales saw growth for the first time in 4 months.
- Online sales of Non-Food products grew 7.6% in October, against a growth of 4.0% in October 2017, the lowest growth of 2017. This is above the 3-month and 12-month averages of 6.7% and 7.4% respectively. Online penetration rate increased from 25.7% to 27.6% in October 2018.
Paul Martin, UK Head of Retail | KPMG
“October kicks off the all-important golden quarter, with some retailers earning the majority of their annual profits in these months alone. But with October’s like-for-like sales flat lining at 0.1%, it was a bit of a non-starter.
“Demand was mainly dampened by continued economic uncertainty, as well as the anticipation for the deep discounting ahead – especially now that Black Friday weekend has become such a permanent feature.
“Grocery sales – which have been a ray of light – actually showed signs of restraint. However, clothing sales were more promising, with the colder weather towards the end of the month prompting a wardrobe rethink.
“The Budget highlighted efforts to relieve some of the pressures on the high street, but didn’t go far enough to address the concerns of many retailers. With the potential implications of a hard Brexit added to the mix, retailers now need to juggle contingency planning alongside the busiest time of year.”
Helen Dickinson OBE, Chief Executive | British Retail Consortium
"Overall, retail sales growth remains low by historical standards. Sales in October saw only a slight uplift on the previous year, as cautious consumer spending continues into the final quarter of the year.
"Brighter weather and the anticipation of better deals in the Black Friday November sales have dampened demand for discretionary purchases. Moreover, low real wage growth over an extended period has left consumers with less money in their pocket, squeezing retailers’ margins in the face of higher costs.
"Furthermore, the very real possibility of a no-deal Brexit presents a huge challenge for retailers who must contend with the prospect of higher import prices, and further drops to consumer demand. Time is running out and it is essential that the Government, the EU and the UK Parliament comes to an agreement on the backstop and delivers a Brexit deal detail which gives confidence to both consumers and retailers, and avoids squeezing real wages further.
Food & Drink sector performance | Jon Woolven, Strategy and Innovation Director | IGD
“After a strong run earlier this year, food and grocery sales have settled into a new pattern of modest growth, broadly in line with inflation. The run up to Halloween delivered its usual boost, on a similar scale to previous years.
“At this critical stage in the Brexit process, shopper confidence is in the balance. The number expecting their personal finances to deteriorate has risen over the last month to 29% from 28%, but those anticipating higher food prices have fallen to 77% from 81%.”
- ENDS -
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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.
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