Weak trend confirmed by August sales
Covering the four weeks 29 July – 25 August 2018
· In August, UK retail sales increased by 0.2% on a like-for-like basis from August 2017, when they had increased 1.3% from the preceding year.
· On a total basis, sales increased 1.3% in August, against an increase of 2.4% in August 2017. This is below the 3-month and 12-month averages of 1.8% and 1.5% respectively.
· Over the three months to August, In-store sales of Non-Food items declined 2.1% on a Total basis and 3.5% on a Like-for-like basis. This is higher than the 12-month Total average decline of 2.6%.
· Over the three months to August, Food sales increased 2.6% on a like-for-like basis and 3.9% on a total basis. This is in line with the 12-month Total average growth of 3.8%.
· Over the three-months to August, Non-Food retail sales in the UK decreased 1.0% on a like-for-like basis and increased 0.1% on a Total basis. This is higher than the 12-month Total average decrease of 0.4%. August Non-Food sales remained in decline.
· Online sales of Non-Food products grew 7.5% in August, against a growth of 11.0% in August 2017. This is below the 3-month average of 7.9% and in line with the 12-month average of 7.6%. Online penetration rate increased from 21.4% in August 2017 to 23.2% in August 2018.
Don Williams, UK Retail Partner, KPMG
“Overall retail spending held up in August, but only just. Whilst any growth is welcome in the current environment, structural changes within the industry continue and there is clearly diverging performance across categories and retail business models. Retailers really need to drive their repositioning, restructuring and transformation programmes with ever increasing energy and urgency.
“Despite temperatures cooling off, the summer sunshine continued to fuel grocery sales. Elsewhere, the prospect of returning to school boosted sales of children’s clothes and computers, although stationary appeared overlooked for the time of year.
“Other non-food categories remained lacklustre but those retailers with a strong online presence once again managed to weather the storm better than their high street counterparts.
“Perhaps unsurprising in a relatively mature market with increasing pressure on margins from rising costs, retailers are increasingly investigating partnerships and collaborations, with many reported in August alone. Such an avenue enables retailers to exploit one another’s strengths to form the perfect combination to win in these testing times.”
Helen Dickinson OBE, Chief Executive, British Retail Consortium
“The trend of weak retail sales growth in 2018 showed little sign of abating as the Summer came to a close this August. The continued pressure on people’s disposable income has meant that some shoppers are increasingly less able to spend on the more discretionary non-food items such as clothing and footwear.
“And it's not only shoppers who are feeling the pinch. Retailers are under significant pressure with rising costs contributing to a difficult trading environment. The disproportionate burden of business rates is not helping matters. The Government must show more urgency of action and freeze rates for a two-year period to allow for a comprehensive reform of the system in order to avoid further yet more store closures and job losses."
Joanne Denney-Finch, Chief Executive, IGD
“As the hot weather faded in August, so did the momentum behind food and grocery sales after a long run of excellent results. Time will tell whether this was just a blip or whether a squeeze on real incomes is beginning to bite.
“From our conversations with shoppers we don’t see next year’s Brexit transition influencing food shopping behaviours yet. Six in ten shoppers say they focus more on day-to-day living rather than thinking about the future.”
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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 ‘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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