BRC – KPMG RETAIL SALES MONITOR JANUARY 2017 | KPMG | UK

BRC – KPMG Retail sales monitor January 2017

BRC – KPMG Retail sales monitor January 2017

Food sales remain solid whilst non-food growth flags

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  • In January, UK retail sales decreased by 0.6% on a like-for-like basis from January 2016, when they had increased 2.6% from the preceding year. 
  • On a total basis, sales rose 0.1% in January, against a 3.3% increase in January 2016. This is well below the 3-month average of 1.1% and the 12-month average of 0.9%.
  • Over the three-months to January, Food sales increased 0.6% on a like-for-like basis and 2.0% on a total basis, clearly ahead of the 12-month Total average growth of 1.0%. This is the second consecutive 3-month average Total growth of 2.0% or above.
  • Over the three-months to January, Non-Food retail sales in the UK rose 0.2% on a like-for-like basis and 0.3% on a total basis. This is below the 12-month Total average growth of 0.8%, which is the lowest since July 2012.
  • Over the three-months to January, Online sales grew 8.6% while In-store sales declined 2.2% on a Total basis and 2.4% on a like-for-like basis.

Helen Dickinson OBE, Chief Executive, British Retail Consortium

“After a strong end to the Christmas trading, year on year sales growth ground to a halt, compensated only by stronger furniture sales and a boost for some retailers from Chinese New Year. While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January. 

“Looking across the last three months, we’ve seen the slowest growth of the festive period since 2009. Closer inspection reveals that this was driven by slowing sales in non-food sectors. 

“These figures suggest that 'caution' was top of new year shopping lists and the uptick in credit card lending at the end of the last year may be short lived. With the signs pointing to upward pressures on shop prices given rising import costs, all eyes will be on the impact of inflation on consumer spending. That said, retailers are a resilient and innovative bunch. They have become increasingly adept at responding to the challenging environment, and as a result the industry has been a key driver of recent UK productivity growth.”

Paul Martin, UK Head of Retail, KPMG

“Performance in January is likely to have left retailers feeling a little deflated, particularly following the strong top-line sales growth reported by many over the Christmas period. Compared to last year, retail sales were down 0.6 per cent on a like-for-like basis this January – somewhat mirroring the sense of back-to-work sluggishness many feel at the start of the new year.  

“As is historically the case in January, furniture sales experienced strong performance, with the new year perhaps prompting shoppers to consider new look décor.

“Food and drink sales remained in the black, much to the relief of grocers. However, with New Year resolutions rejigging the shopping list, healthier items are likely to have been the focus.   

“With consumer price inflation beginning to kick-in alongside retailers’ costs also rising, the sector will need to continue to examine its cost-base as this will be a vital element of success in 2017.”

Joanne Denney-Finch, Chief Executive, IGD

“After strong Christmas sales, grocery retailers were relieved to see solid, if unspectacular, sales in January. The first week was dampened by an extra Bank Holiday Monday but the rest of the month was positive, helped along by a small amount of inflation.

“Shoppers will be watching food prices closely. Two-thirds (65 per cent) believe food prices will have the biggest impact on their personal finances this year, ahead of energy bills (58 per cent), petrol prices (53 per cent) and interest rates (28 per cent). Some recent cost increases for producers have begun to take effect but with currencies in such a state of flux, the picture for later in the year is very hard to predict.”

Notes to editors:

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. 

For media enquiries, please contact:

British Retail Consortium

2 London Bridge London SE1 9RA

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

Simon Wilson 

T: 0207 311 6651

M: 07785 373 397

E:  simon.wilson@kpmg.co.uk

The data is collected and collated for the BRC by KPMG.

BRC

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

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff.  The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 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.

Food data supplied by 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

E: anne.alexandre@brc.org.uk

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