BRC – KPMG retail sales monitor June 2017
Covering the five weeks 28 May – 01 July 2017
• In June, UK retail sales increased by 1.2% on a like-for-like basis from June 2016, when they had decreased 0.5% from the preceding year.
• On a total basis, sales rose 2.0% in June, against a growth of 0.2% in June 2016. This month’s growth is below the 6-month and 12-month averages, both at 1.4%.
• Over the three months to June, Food sales increased 3.6% on a like-for-like basis and 4.7% on a total basis. This is the strongest 3-month average since February 2012, and pulls the 12-month Total average growth to 2.5%, the highest since December 2013.
• Over the three-months to June, Non-Food retail sales in the UK increased 0.9% on a like-for-like basis and increased 1.2% on a total basis, above the 12-month Total average growth of 0.6%. This is the best 3-month average since December, and the first above 1.0% of the year so far.
• Online sales of Non-Food products grew 10.1% in June, compared to 9.0% a year earlier. Over the three-months to June, Online sales of Non-Food products grew 8.4% while In-store sales declined 0.7% on a Total basis and 1.2% on a like-for-like basis, a better performance than the like-for-like 12-month average decline of 2.0%.
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“The arrival of summer provided a welcome pick-up to sales growth in June, particularly to non- food categories which saw a reversal in fortunes after a prolonged period of sluggish growth. Leisure pursuits and activities spurred consumer spending on summer clothing, beauty products and outdoor toys, which were also boosted by gift purchases over Eid.
“The six-month average, buoyed by June’s strong performance, now paints a slightly rosier picture for retail sales. But on closer inspection the year on year numbers belie the fact that rising food prices are responsible for the main component of growth and have prompted more cautious spending towards discretionary non-food items.
“Online continues to take the lion’s share of growth, although contribution from stores increased slightly in June as it seems shoppers headed out with specific purchases in mind, rather than just to browse.
“Looking ahead, there’s a question mark over whether this spending momentum will last, as household expenditure is increasingly squeezed from rising inflation and slowing wage growth. The reality is that retailers’ efforts in absorbing mounting cost pressures into their margins are already being tested, so the Government must have the consumer front of mind as it enters the UK’s trading negotiations with the EU, to avoid any further cost increases to retailers and their customers.”
Paul Martin, UK Head of Retail, KPMG
“After a challenging month in May, retail performance in June appears to have rebounded both online and on the high street. However, whilst the sunshine may have prevailed this month, retailers would be wise to remain cautious.
“For fashion retailers the boost in sales could not have come soon enough. Following a challenging year so far, it appears the higher temperatures thankfully provided an increased interest in summer collections. Elsewhere, the sun also shone on health and beauty sales too, with the category continuing to be a top performer.
“Whilst the latest figures are definitely more favourable than last month’s, retailers must look at the bigger picture. Inflation and household debt are fuelling part of this retail growth, meanwhile the industry is undergoing significant structural changes more broadly. The retailers succeeding are those embracing change.”
Joanne Denney-Finch, Chief Executive, IGD
“According to the Met Office, England enjoyed the second equal warmest June on record. Alongside rising inflation, this helped the food and grocery sector to experience a three-month growth trend that is now at its highest since March 2013.
“The inconclusive election result has introduced further uncertainty and this will test the sector’s momentum. However, there has also been a further injection of shopper patriotism with 47 per cent saying it is very important to support British producers, up from 41 per cent last September.”
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.
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