BRC-KPMG Retail Sales Monitor March 2016 - March sales flat but distorted

March Sales Flat But Distorted

“Neither growth nor decline in total year-on-year sales in March, although this relatively disappointing picture is distorted by the earlier timing of Easter this year.''

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Helen Dickinson OBE, Chief Executive | British Retail Consortium

“Neither growth nor decline in total year-on-year sales in March, although this relatively disappointing picture is distorted by the earlier timing of Easter this year. Food in particular was affected by this timing effect, with sales over the last three-months falling 0.7 per cent; the largest decrease since June. The fashion category also found the going tough, with both clothing and footwear sales showing their largest decline since September 2014, despite increased promotional activity. However, it was a bit of a mixed picture across the industry as a whole with big ticket items continuing to do well and furniture being the main contributor of total sales growth.

“Looking at the long-term picture, the rolling 12-month average growth slowed to 1.4 per cent, its lowest since August 2015. This slowdown can’t be viewed in isolation; retail is an industry undergoing significant structural change as the investment in the digital offer continues apace while, from a consumer perspective, more disposable income is being spent on leisure and entertainment.”

David McCorquodale, Head of Retail | KPMG

“Despite the clock move bringing extra hours of daylight, there was no ‘spring forward’ for retail sales during March with growth broadly flat overall.

“Earlier Easters are not always good for the fashion industry as consumers are put off purchases of lighter fashions and footwear in cooler temperatures and this was certainly the case this year. However, furniture and home accessories benefited from consumers taking on home improvement projects over the long weekend while the ‘Mother’s day effect’ boosted sales of jewellery and watches.

“The grocery sector’s drive for everyday low pricing and waste reduction contributed to the decline in food and drink sales, pulling the three-month average total sales into the negative.

“Looking ahead, retailers will be hoping for fewer April showers this month to entice spending on these newly launched ranges and to help alleviate the additional cost burden with the implementation of the National Living Wage.”

Food & Drink sector performance | Joanne Denney-Finch, Chief Executive | IGD

“On the face of it these look like disappointing food and drink sales. However, it is difficult to make direct comparisons with last year, as Easter 2015 fell in April. Leaving aside the Easter distortions, the underlying sales trend remains relatively flat.

“Although there are several uncertainties, the economic fundamentals for the UK remain sound. Improving shopper sentiment should help. Nearly three-quarters (73 per cent) of shoppers say their personal economic situation will improve or stay the same in the coming year, compared to just four in ten (39 per cent) who said the same in 2011. The challenge for food and drink businesses is converting this into higher sales.”

NOTES

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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Zoe Maddison

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KPMG

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Jessica Liebmann

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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.

KPMG 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 revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 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.

IGD makes a difference by providing international market intelligence, supply chain best practice and consumer insight to the food and grocery industry worldwide.We work with consumers, companies and individuals across the chain to provide authoritative information, insight, thought leadership and leading edge best practice to help companies grow their business and develop their people.

Detailed weekly data by category is available to retailers who contribute to the monitor:

If you would like to participate in the Retail Sales Monitor, please contact:

Anne Alexandre

T: 0207 854 8960

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