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News - 13 February 2010

Retails sales worst for 15 years

KPMG has just reported the worst January sales for 15 years. The BRC-KPMG Retail Sales Monitor has shown a drop of 0.7% in overall retail sales. Was it entirely down to the snow?

UK retail sales values fell 0.7% on a like-for-like basis from January 2009, when sales had risen 1.1%. On a total basis, sales rose 1.2% against a 3.2% increase in January 2009.

The snow boosted food sales in the first week of January as people stocked up on essentials, but hit non-food, especially discretionary items. When the weather improved, food sales slowed but non-food staged a partial recovery. Over the month, food, clothing and footwear showed gains on a year ago, but homewares and furniture showed declines.

However, non-food non-store sales (internet, mail-order and phone sales) in January were 14.6% higher than a year ago compared with 26.5% in December. Some benefited from shoppers buying online when snow prevented them from getting out.

Stephen Robertson, Director General, British Retail Consortium, said, “An awful start to the year and in stark contrast to an upbeat December. This is the worst January growth in total sales in the 15 years we’ve been running the survey. It was a month of two halves with a focus on must-haves early on. The coldest January since 1987 boosted food sales at the start of the month, as shoppers stocked up. But food sales growth melted with the snow. The month as a whole was significantly weaker than December.

“Most non-food sectors had a poor start, though nearly all recovered towards the end of the month. Furniture and DIY were worst hit as customers put off buying non-essentials. The VAT change brought some sales forward to December, but customers are becoming cautious again in the face of economic and political uncertainty. Retailers will be hoping these results are mainly a snow induced blip, rather than an indication of further difficulties.”

Helen Dickinson, Head of Retail, KPMG, said, “A very mixed performance in January which was impacted by a number of factors.  The snow in the early part of the month caused consumers to stock up on food related items as travelling the country became treacherous while non-food suffered.  As the month progressed, clothing and footwear picked up considerably but other non-food sectors continued to show weakness.  Although the results were flattered by the impact of higher shop prices, given the higher VAT rate in January 2010 compared to January 2009, this was less pronounced than in December. The underlying trend is difficult to read but there is no doubt that the strong sales we saw in December 2009 are not indicative of the trend for the rest of this year.”

Joanne Denney-Finch, Chief Executive, IGD, said, “After a buoyant December, when shoppers treated themselves at Christmas, January saw a return to the lower growth seen last autumn. The snow affected shopping patterns with many consumers stocking up and driving sales at the start of January. Supermarkets and suppliers kept the shelves full, demonstrating the resilience of the food industry and its ability to rise to the challenge of adverse weather conditions.


Read related items on:
Retail, pubs, clubs and restaurants
Recession
British Retail Consortium
KPMG
Denney-Finch, Joanne
Dickinson, Helen
Robertson, Stephen


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