BRC-KPMG RETAIL SALES MONITOR JUNE 2014: SALES OF HOME PRODUCTS SLOW DOWN IN JUNE
|July 15, 2014|
| |UK retail sales were down 0.8% on a like-for-like basis from June 2013, when they had increased 1.4% on the preceding year. On a total basis, sales were up 0.6%, against a 2.9% rise in June 2013.
BRC Director General
Excluding Easter distortions, this is the lowest total growth recorded since May 2011. However, the three-month average is in line with the twelve-month average of 2.5%
Over the last three months, Food showed almost no total growth, at 0.1%, in contrast with the growth of 1.1% experienced over the last twelve months. Non-Food reported growth in line with the twelve-month average of 3.7% over the last four months – which irons out Easter distortions.
Online sales of non-food products in the UK grew 10.6% in June versus a year earlier. The Non-Food online penetration rate was 17.2% in June, 0.9 percentage point higher than in June 2013.
Helen Dickinson, Director General, British Retail Consortium, said: "Consumers continue to benefit from competitive pricing, which may be the cause of softer like-for-like sales in June. For retailers, it's a bit of a mixed picture, with food sales down and non-food sales up but at a slower rate than in June. Are consumers pausing for a breath after the recent rush for revamping their homes? Could it be that they are feeling a touch more confident and have bought into fashion at full price, which in turn has encouraged some retailers to delay their summer sales? In this case, retailers may find that their margins are less affected than figures would suggest.
"On the other hand, the total value of overall food sales is still in decline but the lower pricing policies we have witnessed are good news for consumers who are set to continue to benefit from keen bargains in their shopping baskets.
"The recovery is still on track, however, we are detecting differences in attitudes from customers, perhaps led by the competitive environment for food prices. Consumers are delighted to be saving on their food bills, but are prepared to spend a little bit more on discretionary items."
David McCorquodale, Head of Retail, KPMG, said: "Concern over a potential rise in interest rates is having a dampening effect on retail sales. June saw the brakes applied to spending as shoppers put purchases of big ticket items on hold whilst they waited to see if the Bank of England would take action on interest rates. Even sales of home accessories and furniture flat-lined, which is surprising given the UK is reportedly in the midst of a housing boom.
"Sales in the food sector also struggled, with England's early exit from the World Cup exacerbating the grocers' problems. The price war continues to take a heavy toll on the profitability of the sector, which saw sales decline in value again this month.
"Clothing retailers fared better, with glorious sunshine driving demand for summer clothes and shoes. These steady sales mean that most fashion retailers have not resorted to the deep discounting we have seen in previous years, and this will help them to hold on to their margins.
"Looking forward, retailers have two months of tough comparables coming up after Murray mania, a heat-wave and the arrival of the royal baby boosted sales last year. This past performance will make like for likes look challenging over the next quarter."