BRC-KPMG: ‘encouraging’ pre-Christmas sales pick-up

Pre-Christmas sales were given an ‘encouraging’ boost in October, with sales up 0.8% on a like-for-like basis, according to data from the British Retail Consortium (BRC) and KPMG.

On a total basis, sales were up 2.6%, against a 1.1% increase in October 2012. While food and clothing experienced a decline, strong growth in other non-food area “points to an encouraging start to the festive season,” the BRC-KPMG Retail Sales Monitor said.

BRC director general Helen Dickinson noted: “It’s encouraging to see growth heading in the right direction again, after a disappointing slowdown in September. Much of the improvement was driven by sustained demand for new games and gadgets, and there was also a strong showing for home accessories and textiles. In contrast, clothing sales fell for the first time since March, suggesting that many customers prioritised leisure and home improvements over refreshing their wardrobes until more autumnal conditions took hold.

“Consumer confidence paused in October, and while conditions remain challenging, the signs are that customers are managing their budgets well, while allowing some leeway for occasional treats. Retailers will be looking to respond to this appetite for good value with a little luxury here and there in their promotions and product offerings for the Christmas period.”

David McCorquodale, Head of Retail, KPMG, said: “October was another difficult month for retailers, reminding us that recovery is a slow, relentless slog. Whilst the summer months hinted at increased consumer confidence, retailers will struggle to maintain a sustained sales recovery until wage growth outpaces price inflation. While confidence may lead consumers to browse, it’s cash that’s needed in the tills.

“The fight for market share in the food and drink space, whilst offering value for the consumer, reduced the 3-month growth figure below inflation. Clothing and footwear had a difficult month as temperatures refused to drop, whilst other non-food items such as electricals performed better, aided by the online channel.

“The next two months are vital with stock holdings, merchandising and margins being key to success. Shoppers seem reluctant to buy their gifts early and at full price and many may be delaying their purchases in the hope that retailers will discount festive goods as the big day nears.

“The pressure is on retailers to kick-start sales, without the need to heavily discount. Christmas has always been retailers’ golden goose – and a good performance in the next two months will help those in the red move back to the black.”

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