BRC - KPMG Retail Sales Monitor January 2018 | KPMG | UK

BRC - KPMG Retail Sales Monitor January 2018

BRC - KPMG Retail Sales Monitor January 2018

January shoppers keep calm and carry on

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Covering the four weeks 31 December 2017 – 27 January 2018

  • In January, UK retail sales increased by 0.6% on a like-for-like basis from January 2017, when they had decreased 0.6% from the preceding year.
  • On a total basis, sales rose 1.4% in January, against a growth of 0.1% in January 2017. This is roughly in line with the 3-month and 12-month averages of 1.5% and 1.6% respectively.
  • Over the three months to January, In-store sales of Non-Food items declined 2.9% on a Total basis and 3.6% on a Like-for-like basis. On a 12-month basis, the total decline was 2.3%.
  • Over the three months to January, Food sales increased 2.9% on a like-for-like basis and 4.1% on a total basis. This remains above the 12-month Total average growth of 3.7%, the highest since November 2012.
  • Over the three-months to January, Non-Food retail sales in the UK decreased 1.2% on a like-for-like basis and 0.6% on a total basis. This is below the 12-month Total average decrease of 0.1%, the first 12-month average decrease since September 2009.
  • Online sales of Non-Food products grew 5.3% in January, against a growth of 8.0% in January 2017. This is below the 3-month and 12-month averages of 6.6% and 7.8% respectively. Online penetration rate increased from 21.9% in January 2017 to 22.2% in January 2018.

Helen Dickinson OBE, Chief Executive, British Retail Consortium

“The persisting tough trading environment played out at the start of the year with a mixed set of trading updates and subsequent announcements. Sales as well as profits are seemingly harder to come by. Against this challenging back-drop, 2018 didn’t have a bad start during what is traditionally a lean month, with sales creeping up in-line with the year’s average.

“The figures paint the same old picture of divided fortunes for food and non-food sales. Rising food prices continued to inflate sales growth and absorb the lion’s share of shoppers’ squeezed budgets, while sales of non-food items struggled in January, dragging the 12- month average into negative territory for the first time in nine years.

“Clothing however, bucked the winter trend for the non-food categories. Some retailers were able to scale back promotions, having shifted more of their stock during the festive sales than last year, and saw encouraging early demand for their new season ranges.

“Overall though, the going remains bumpy as consumers are still seeing wages fall in real terms. Although inflation will ease a bit this year these pressures will remain, so to ensure no more pain is added to household budgets, we want to see our Brexit negotiators focus on delivering the terms of the transition to provide businesses and consumers with some much needed certainty.”

Paul Martin, Head of Retail, KPMG

“January typically presents retailers with a tough gig persuading shoppers to spend in what is a cash-strapped month for most. With that in mind, 1.4 per cent growth – or 0.6 per cent on a like-for-like basis – has to be seen as a success, albeit food sales continue to be the driver of this growth.

“There was little growth in most categories besides food. Bigger ticket items such as furniture traditionally rely on strong post-Christmas trade, but this year seem to have struggled to woo consumers with the lure of a sale sign in the window. Online sales fared better, with bargain hunters most interested in fashion and tech.

“With Christmas reporting now behind us, the true financial health of the industry comes into focus. For many retailers, online sales have taken the sting out of the challenging trading environment. It’s therefore not surprising to see many retailers rethink their physical presence. Ensuring you can deliver a customer-centric and channel agnostic proposition will increasingly split the winners from the losers in 2018.”

Joanne Denney-Finch, Chief Executive, IGD
“Food and grocery sales stayed resilient this month, maintaining the trend from 2017. This is in spite of the tradition in January for people to cut back on indulgences. From our research, 85 per cent of shoppers claim to be trying to improve some aspect of their diet.

“Shoppers remain attracted by innovation and quality. Two-thirds, 66 per cent, say they are sometimes tempted to pay extra for premium quality food and drink products.”

 

-ENDS-

 

Notes to editors:

For Media Enquiries:

Simon Wilson
PR Assistant Manager, KPMG
T : 0207 311 6651
M : 0778 537 3397
E : simon.wilson@kpmg.co.uk

Media Relations Officer, BRC
T : 0207 854 8924
E : media@brc.org.uk


Alexandra Crisp
Senior Communications Officer, IGD
T : 01923 857141
M : 07590 183295
E : Alexandra.Crisp@igd.com

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.

About KPMG in the UK

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. 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.

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