UK retail sales decreased 0.4% on a like-for-like basis from November 2014, when they had increased 0.9% from the preceding year. On a total basis, sales were up 0.7%, against a 2.2% rise in November 2014. Adjusted for the BRC-Nielsen Shop Price Index deflation, total growth was 2.2%.
Helen Dickinson, Chief Executive, British Retail Consortium, said: “With growth of 0.7 per cent, November was quite a slow month overall for retail. The picture was somewhat mixed when we look across the different categories, with half experiencing growth and the other half seeing a decline. Furniture and the home categories were the main drivers of growth for the month, with large and small electrical appliances doing particularly well, driven by Black Friday sales. Black Friday had an undoubtedly significant impact for the non-food categories, disturbing the build-up to Christmas: traditionally, sales in the last week of November were 25 per cent larger than in the first week of the month. Last year already, those sales were inflated by the popularity of Black Friday deals and this year, they were 50 per cent larger than in the first week of November.
“As consumers and retailers continue to adapt to the changing patterns of omni-channel shopping, where the lines between channels become less and less relevant, this build-up to Christmas is one of the hardest to read in years. The conversion of people's higher disposable income into retail sales shouldn’t be taken for granted.”
David McCorquodale, Head of Retail, KPMG, said: “November’s relatively flat sales figures are a reality check for the retail sector with consumers holding off for a Black Friday bargain pitted against retailers determined to hold onto their hard-earned margins. The result was that, despite the hype around Black Friday, there was minimal loosening of the family purse strings compared to last year and retailers, facing significant cost increases next year, will be striving to wean UK shoppers off the discounting drug.
“Detailed examination of November trading shows a slowdown in most categories as consumers held off purchases in the hopes of a deluge of Black Friday discounts. Whilst many retailers participated, categories which saw the biggest uplift on the day were the electricals ones where, I suspect, the discounting pain was borne by supplier and retailer alike. In clothing and footwear, brands tended to hold their nerve to retain margins.“While Black Friday ended up being more of an online affair, the focus over the next few weeks is to promote the theatre of the store for Christmas in the hopes that the tills will be ringing all the way into the New Year.”
Food & Drink sector performance – Joanne Denney-Finch, Chief Executive, IGD, said: “Food and drink plays only a small part in Black Friday and so the bulk of attention was directed elsewhere in November. It was an uneventful month for grocery sales although beers, wines and spirits enjoyed a strong uplift in the final week, helped by price promotions.
“The spotlight will now fall on the grocery sector and all signs point towards a ‘multichannel Christmas’ with spending spread across a variety of formats. Supermarkets will remain the most popular destination but seven in ten shoppers say they will use discounters for some of their Christmas food shopping and a fifth will order online.”
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 ONS weightings) 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 aggregation of data for the weighted ‘online’ figures has been performed by the BRC and KPMG for periods starting 25 November 2012 and equivalent prior year periods. Prior to that date, the online figures in this monitor refer to the unweighted non-food non store indicator, as published in the BRC-KPMG Retail Sales Monitor until July 2013.
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.
© Copyright British Retail Consortium and KPMG (2014). The contents of this report and those of all ancillary documents and preparatory materials are the sole property of BRC and KPMG and are not to be copied, modified, published, distributed or commercially exploited other than with the express permission of BRC or for the purposes of journalistic comment and review. All rights reserved.
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The December 2015 Monitor, covering the five weeks 29 November – 2 January, will be released at 00.01am Tuesday 12 January 2015.
The data is collected and collated for the BRC by KPMG.
The British Retail Consortium (BRC) is the UK's leading retail trade association. It represents the full range of retailers, large and small, multiples and independents, food and non-food, online and store based.Sponsored and Administered byKPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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