September sees growth of retail essentials
Covering the four weeks 27 August – 30 September 2017
• In September, UK retail sales increased by 1.9% on a like-for-like basis from September 2016, when they had increased 0.4% from the preceding year.
• On a total basis, sales rose 2.3% in September, against a growth of 1.3% in September 2016. This is above the 3-month and 12-month averages of 2.1% and 1.7% respectively.
• Over the three months to September 2017, In-store sales of Non-Food items declined 1.5% on a Total basis and 2.0% on a Like-for-like basis.
• Over the three months to September, Food sales increased 2.5% on a like-for-like basis and 3.5% on a total basis. This remains above the 12-month Total average growth of 2.9%, the highest 12-month average since August 2013.
• Over the three-months to September, Non-Food retail sales in the UK increased 0.5% on a like-for-like basis and 0.9% on a total basis, above the 12-month Total average growth of 0.7%.
• Online sales of Non-Food products grew 10.7% in September, above both the 3-month and 12-month averages of 10.0% and 8.8% respectively. Online penetration rate increased from 21.5% in September 2016 to 22.4% in September 2017, the highest penetration rate since January.
Helen Dickinson OBE, Chief Executive | British Retail Consortium
“September saw a second consecutive month of relatively good sales growth which should indicate welcome news for retailers and the economy alike. Looking beneath the surface though, we see that much of this growth is being driven by price increases filtering through, particularly in food and clothing, which were the highest performing product categories for the month. Retailers have worked hard to keep a lid on price rises following the depreciation of the pound, but with a potent mix of more expensive imports and increasing business costs from various government policies, something had to give at some point.
“From a consumer perspective, spending is still being focussed towards essential purchases; with consumers buying their winter coats and back to school items, but shying away from big ticket items such as furniture and delaying the renewal of key household electrical goods. Online has been the biggest beneficiary of the resilience in consumer spending capacity in the last two months, sustaining a return to double digit year on year growth figures as shoppers responded well to discounts and the ongoing investment by retailers in improving the mobile shopping experience.
“September’s overall growth may increase the likelihood of an uplift in interest rates in November. So with stronger headwinds brewing, its vital government keep a tight lid on those costs under its control, which impact on retailers, the cost of doing business and ultimately consumers. The Chancellor has a great opportunity to do just that in his upcoming budget by not adding yet another rise on the business rates bill of every retailer in the country.”
Paul Martin, Head of Retail | KPMG UK
“September’s performance will have left many retailers with smiles on their faces, with sales up 1.9 per cent on a like-for-like basis, compared to last year.
“Children’s clothing clearly hit the mark as one of the leading categories in the month, whilst the August bank holiday and favourable autumnal weather lent a helping hand to non-food sales. Grocers will also be feeling the warmth having performed particularly well, as food and drink remains in high demand with shoppers – although food price inflation continues to be a key driver of this growth.”
“Non-food online sales continued to soar with double digit growth, outpacing the uptick seen on the high street.
“However, with potential interest rate rises on the horizon, shaky consumer confidence and ever increasing levels of household debt, uncertainty remains. We’re now moving into the final quarter, which will ultimately define whether 2017 has been a good or bad year for retailers.”
Food & Drink sector performance | Joanne Denney-Finch, Chief Executive | IGD
“September was a consistently strong month for food and grocery sales with little variation from week to week. This extends the good run from spring into autumn, albeit driven more by rising prices than volumes.
“After several months of inflation, a growing number of people are taking more time to hunt down value. Just under half (46 per cent) of shoppers now say they usually look for the cheapest products, even if it takes more time, versus 40 per cent in March.”
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:
PR Assistant Manager, KPMG
T 0207 311 6651
M 0778 537 3397
Media Relations Officer, BRC
T 0207 854 8924
Head of Corporate Communications, IGD
T 01923 857141
M 07811 930971
The data is collected and collated for the BRC by 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.
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.
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:
T: 0207 854 8960