British Retail Consortium: spending languishes in July

Covering the four weeks 30 June – 27 July 2019

• On a total basis, sales increased by 0.3% in July, against an increase of 1.6% in July 2018. This is the lowest figure recorded for the month of July since our records began in 1995 and comes after the worst June on records. This is above the 3-month average of -1.3% but below the 12-month average of 0.5%. This is the lowest 12-month average on records.
• UK retail sales increased by 0.1% on a Like-for-like basis from July 2018, when they had increased 0.5% from the preceding year. This is above the 3-month and 12-month averages of -1.5% and -0.2% respectively.
• Over the three months to July, In-store sales of Non-Food items declined 4.1% on a Total basis and 4.0% on a Like-for-like basis. This is worse than the 12-month Total average decline of 2.6%.
• Over the three months to July, Food sales decreased 1.0% on a Like-for-like basis and 0.3% on a Total basis. This is below the 12-month Total average growth of 1.8% and the lowest 3-month average since December 2014, excluding Easter distortions.
• Over the three-months to July, Non-Food retail sales in the UK decreased by 2.0% on a like-for-like basis and 2.1% on a Total basis. This is below the 12-month Total average decrease of 0.6%. For the month of July, Non-Food was in growth year-on-year.
• Online sales of Non-Food products grew 3.7% in July, against a growth of 7.5% in July 2018. The 3-month and 12-month average growths were 3.1% and 4.7% respectively.
• Non-Food Online penetration rate increased from 28.4% in July 2018 to 29.8% last month.

Helen Dickinson OBE, Chief Executive | British Retail Consortium

“While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry. The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.

Whereas last year’s glorious sunshine and World Cup Finals led to strong consumer demand over the summer, this year has been weak in comparison, with both June and July showing the lowest sales on record for their respective months. And it is not just high streets that are suffering, with Non-food online growth also one percentage point below the 12-month average.

“The challenging retail environment is taking its toll on many high street brands who must contend with rising import costs, a multitude of public policy costs, and ever higher business rates. A coherent strategy for retail is needed. The Government should freeze future business rates rises and fix the appeals system before embarking on a wholesale reform of this broken tax system.”

Paul Martin, UK Head of Retail | KPMG

“The UK may have had record temperatures in July, but retail sales were far from record-breaking at just 0.3% growth. While any growth is welcome after two months of decline, it’s clear that most players need more than sunshine to get back on their feet.

“Given the weather it’s unsurprising that shoppers reconsidered their wardrobe, but it was online retailers who benefitted most once again. Online non-food sales overall actually grew by only 3.7%, which is considerably lower than previous years. Meanwhile, another category which has historically benefitted from the good weather is grocery, but even here sales are lacklustre, which is a cause for concern.

“With consumer confidence holding up in the face of prolonged Brexit uncertainly, shoppers are notably disengaged overall. The pressure continues to build between online and physical offerings, costs continues to rise and the demands of consumers continue to grow. The key question is, who can handle the heat?”

Food & Drink sector performance | Susan Barratt, CEO | IGD

“Success for England’s big sporting teams tends to provide a boost for food and drink sales, so the men’s cricket and the women’s football teams were both good for business in June. However, the same applied last year with similar sporting success, and the year-on-year comparison was a draw with flat food and grocery sales. 

“There has been some inflation though, meaning a drop in real terms and the underlying conditions are tight for food retailers.”