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Case Studies

BRC – KPMG RETAIL SALES MONITOR SEPTEMBER 2016...Covering the four weeks 31 July – 27 August 2016

Summary

- On a total basis, sales declined 0.3%, against a 0.1% increase in August 2015. This is the weakest performance since September 2014, excluding Easter distortions. On a three-month basis, Total UK retail sales rose 0.6%, half the rate of the 12-month average of 1.2%.

- On a three-month basis, Total Food sales increased 0.9%, its best level since December 2013 excluding Easter distortions, comfortably ahead of the 12-month average of 0.3%.

- On a three-month basis, Total Non-Food sales rose 0.4%, a significantly slower rate than the 12-month average of 1.9%. The slowdown – affecting most Non-Food categories – was driven by lower footfall due to the warmer weather and is therefore likely to be short-lived.

Helen Dickinson OBE, Chief Executive, British Retail Consortium says: "A month of extraordinary achievement for Team GB certainly produced a feel-good effect and consumer confidence was up on July, but that generally didn't translate into extra sales. Consumers were enticed towards leisure and outdoor activities rather than shopping, although Food did post its strongest performance in more than two years; fuelled by demand for picnic, barbeque supplies and celebratory drinks.

But she warned: "Care should be taken in reading too much into August's lacklustre performance. As we've seen in the last couple of months, data portending the health of the economy paint a volatile picture. The fact is that so far little has directly changed for the UK's consumers as a result of the referendum, so it's the pre-existing market dynamics that are still driving sales. The slowdown in real wage growth in the first half of 2016 and strong competition will continue to weigh on trend growth in total sales; whilst holiday timings, promotional and seasonal activity will contribute to fluctuations month on month."

David McCorquodale, Head of Retail, KPMG observes: "In contrast to July, August's retail figures illustrate somewhat of a U-turn of retail fortunes. Like-for-like sales were down 0.9 per cent on this time last year - painting a disappointing picture given previous signs of encouragement.

According to Mr McCorquodale sales of women's fashions performed particularly poorly, despite widespread promotions. He blamed the poor sale on the weather saying: "The warmer weather made it almost too hot to shop and dissuaded shoppers from looking at the newly arrived autumn products. Despite this, jewellery sales continued to benefit from international shoppers taking advantage of the weaker pound. Whilst for those at home, some of whom may have opted for a staycation given the exchange rate, the warmer weather put wine and barbeques firmly on the menu – much to the delight of food and drinks sellers."

McCorquodale adds: "With the Bank holiday weekend and ‘back to school' sales largely falling in next month's figures, it's unsurprising that children's fashion and footwear haven't yet experienced an uplift. Given the volatility of retail sales in the past few months, no doubt retailers will be hoping for a smoother ride in the lead up to Christmas."

Food & Drink sector performance, Joanne Denney-Finch, Chief Executive, IGD says:  "A strong August for sales under mainly blue skies completed a good summer for grocery retailers, with the best underlying three-month growth for more than two years.

She concludes: "Although 51 per cent of shoppers feel that the next 12 months is a time for them to play it safe in financial terms, this does not seem to be curtailing overall spending on everyday items like food and groceries."