BRC-KPMG Retail Sales Monitor April 2016 - Retail sales flat again in April

Retail sales flat again in April

April saw the second month of flat sales for UK retailers with positive food sales offset by record declines in fashion.

Head of Retail UK and Partner

KPMG in the UK

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Helen Dickinson OBE, Chief Executive | British Retail Consortium

“April saw the second month of flat sales for UK retailers with positive food sales offset by record declines in fashion. As a result, the 12-month average growth for non-food sales slowed to 2.5 per cent while for food sales it nudged back into positive territory at 0.1 per cent.

“Some retailers will take comfort in the fact that sales in the home categories continued to grow; once again ranked as the best performing sector. This is on the back of a continuing rise in the number of home owners enjoying record low interest rates.

“Over all, flat total sales mask a very mixed picture; some retailers benefitting from the healthy housing market, while others are evidently more susceptible to the effects of lower consumer confidence and a higher proportion of disposable income going into leisure and entertainment. While glimmers of hope are evident, the rapid pace of change in the industry, increasing cost pressures and other businesses burdens remain a cause for concern.

”David McCorquodale, Head of Retail | KPMG

“Overall, retail sales slowed during April with temperatures well below the average for the time of year. Looking at the three months to April, non-food like-for-like growth was particularly weak, especially for fashion and footwear, as the cooler weather dampened the launch of spring/summer ranges.

“On the brighter side, furniture and home accessories continued to fare well as retailers reaped the benefits of well-timed promotions. And there was also some mild relief for the grocers with total food and drink sales inching up slightly versus April 2015. However, as consumers still appear to be hooked on a diet of discounts, deflationary trends in the sector look set to continue.

“With warm spring-like conditions now prevailing, fashion retailers will be hoping this will motivate the summer wardrobe refresh, and the grocers will be looking forward to a summer of sporting events in the hopes the feel good factor will encourage consumer spending.”

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

“The varying date of Easter makes comparison difficult at this time of year, but a clearer picture emerges when March and April grocery sales are combined. This shows a small drop versus last year, less than the fall in prices. So we remain in a corridor of uncertainty where sales value is slightly down but sales volume is up.

“Retailers continue to reaffirm their focus on everyday lower prices. 44 per cent of shoppers tell us they would prefer more everyday low pricing than more promotions, with just 14 per cent saying the reverse.”

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.

Media Enquiries

British Retail Consortium

21 Dartmouth Street

London SW1H 9BP

T: 020 7854 8900 

W: www.brc.org.uk

Zoe Maddison 

T: 0207 854 8924 

E: zoe.maddison@brc.org.uk

KPMG 15 Canada Square London, E14 5GL

T: 020 7311 1000 

W: www.kpmg.co.uk

Jessica Liebmann 

T: 0207 311 3245 

M: 07551 135 778

E: jessica.liebmann@kpmg.co.uk

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.

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

0207 854 8960

anne.alexandre@brc.org.uk

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