BRC - KPMG Retail Sales Monitor June 2016: Too early to assess any Brexit impact on retail sales

BRC - KPMG Retail Sales Monitor June 2016

“Retail sales grew in June, albeit with total growth slowing to 0.2 per cent. While sales did slow towards the end of the month, it is too early to define this as a trend." says Helen Dickinson OBE, Chief Executive at British Retail Consortium.

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Helen Dickinson OBE, Chief Executive | British Retail Consortium

“The month outturn was predominantly driven by a decline in sales in the fashion categories and isn’t a surprise given that June 2015 saw record growth in clothing and footwear. Looking across the last three months, food has held its ground with a better performance than non-food sales, which has seen its lowest growth since April 2012, largely due to fashion combined with a slowdown in furniture. 

Britain's retailers remain open for business. The EU referendum vote has not changed their relentless pursuit of delivering for customers day in, day out or their investment in meeting the needs of fundamental changes in the way people shop, driven by digital and technology. Despite the fall in the pound, the time it takes for any input price increases to translate into higher shop prices will depend on a combination of factors including further changes in the pound, commodity prices and the challenge for retailers to move pricing given the intensity of competition. So, there won’t be any instant shocks as any changes would take time to feed through. 

David McCorquodale, Head of Retail | KPMG

“Overall retail figures decelerated in June, with sales down 0.5% on a like-for-like basis. As consumer attention shifted indoors to escape autumnal downpours, furniture and home accessories bounced back in the month, with bigger ticket items proving relatively resilient in the days immediately following the EU referendum. 

“With May sunshine a distant memory, however, summer wardrobes remained bare as sales of women’s fashion and footwear plummeted following one of the wettest and dullest starts to a UK summer since records began. 

“Elsewhere, Euro 2016 kicked things into gear a bit for the grocers, with sales improving 0.8% in the three months April-June. However, the decline on a like-for-like basis suggests food and drink sales continue to be dragged down by the deflationary tide in the sector. 

“While the ramifications from the Brexit vote may well affect consumer confidence, retailers will be hoping the long-promised heatwave and potential stay at home holidays will be enough to drive shoppers back to the high-streets over the months ahead.” 

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

“The surprise result of the referendum appeared to trigger an immediate drop in food and drink spending, which more than offset some modest sales growth earlier in the month. Hopefully, this will prove to be a short-lived shock and calmer waters lie ahead. 

“In data tracked throughout June, 56 per cent of shoppers predicted their personal financial situation would stay the same over the next 12 months, up from 29 per cent anticipating this during January 2011. We will be monitoring this figure closely.” 

 

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 

T: 0207 854 8960 

E: anne.alexandre@brc.org.uk 

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