RECORD DECLINE FOR NON-FOOD IN OCTOBER
Covering the four weeks 1 – 28 October 2017
• In October, UK retail sales decreased by 1.0% on a like-for-like basis from October 2016, when they had increased 1.7% from the preceding year.
• On a total basis, sales rose 0.2% in October, against a growth of 2.4% in October 2016. This is the lowest growth since May and below the 3-month and 12-month averages of 1.7% and 1.5% respectively.
• Over the three months to October 2017, In-store sales of Non-Food items declined 2.2% on a Total basis and 2.9% on a Like-for-like basis. On a 12-month basis, the total decline was 2.1%, the deepest since our records began in January 2012.
• Over the three months to October, Food sales increased 2.4% on a like-for-like basis and 3.7% on a total basis. This remains above the 12-month Total average growth of 3.2%, the highest 12-month average since July 2013.
• Over the three-months to October, Non-Food retail sales in the UK decreased 0.4% on a like-for-like basis and increased 0.1% on a total basis, below the 12-month Total average growth of 0.2%, which is the lowest since we started measuring Non-Food in January 2011. The monthly decline is also the deepest since our records began.
• Online sales of Non-Food products grew 4.0% in October, below both the 3-month and 12-month averages of 8.7% and 8.3% respectively. Online it was the lowest growth since our records began in December 2012. Online penetration rate increased from 22.6% in October 2016 to 23.7% in October 2017, the highest penetration rate since December 2016.
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“It was a meagre month in October for retail sales as shopping activity slumped. With total growth at its lowest since May and below the 12-month average, retailers will have cause for concern as they prepare for the crucial run up to Christmas.
“The decline was driven by the worst performance of non-food sales since our record began in January 2011, as consumers appear to have opted for outdoor experiences and excursions during half term, over visits to the shops. The growth in food sales meanwhile, adds some colour to this otherwise anaemic picture, but these figures are very much buoyed by inflation.
“Real consumer spending power has been on a downward trend in the last year as the acceleration in inflation has caused shoppers to become ever more cautious in considering what purchases they can afford. Many now face higher borrowing costs, given the rise in interest rates, which will only serve to heap further pressure onto household finances.
“Considering the intrinsic link between consumer spending and economic growth, the Chancellor should reflect on this disappointing state of play and deliver a Budget that allays the risks of a further slowdown in consumer spending, by keeping down the cost of living. In other words, a shoppers Budget.”
Paul Martin, Head of Retail, KPMG
“October marked yet another reversal of fortunes for retailers, reinforcing just how volatile consumer spend has been. Despite the positive picture last month, these latest figures will be a real disappointment and not the start to the golden quarter retailers had hoped for.
“Clothing sales were particularly hard hit. After a brief uptick, fashion sales reverted back to the dreary theme we have seen for a number of months this year. Unseasonably warm weather last month will not have helped, but this is unlikely to be the only reason the new ranges are proving unpopular.
“Overall growth online was lacklustre at best, although health and beauty products continued to stand out as a strong performer. The burning questions for retailers will be whether shoppers are holding off their purchases until Black Friday, and whether retailers can recover from this month’s poor performance to end the year on a high.
“With the Bank of England’s interest rate decision seeing the first hike in ten years, we are likely to see a continuation of the sector's slow-down, with consumers having less disposable income to spend. The Autumn Budget also nears closer and retailers will most likely be hoping for some form of relief, particularly after the challenges business rates created.”
Joanne Denney-Finch, Chief Executive, IGD
“Food and grocery sales have remained buoyant with another month of above inflation growth, perhaps benefiting from cutbacks elsewhere in household spending. However, with 77 per cent of shoppers expressing concern about the state of the economy and 79 per cent about living costs, a mood of caution prevails. A fifth (20 per cent) say they will focus more on saving money in their food and grocery shopping in the year ahead – the record highest level since September 2016.”
Notes to editors:
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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.
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