Consumer spending ‘left languishing’ says BRC boss

UK retail sales increased by 0.1% on a like-for-like basis from July 2018, when they had increased 0.5% from the preceding year, according to the latest figures from BRC (British Retail Consortium) and KPMG.

Covering the four weeks from June 30 to July 27, the BRC-KPMG monthly sales monitor reported that on a total basis, sales increased by 0.3% in July, against an increase of 1.6% in July 2018.

This is the lowest figure recorded for the month of July since records began in 1995 and comes after the worst June on records. This is above the 3-month average of -1.3% but below the 12-month average of 0.5%. This is the lowest 12-month average on records

Over the three months to July, in-store sales of non-food items declined 4.1% on a total basis and 4.0% on a like-for-like basis. This is worse than the 12-month total average decline of 2.6%. Online sales of non-food products grew 3.7% in July, against a growth of 7.5% in July 2018.

BRC chief executive Helen Dickinson OBE said: “While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry. The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing, with the 12-month average total sales falling to a new low of just 0.5%.

“Whereas last year’s glorious sunshine and World Cup Finals led to strong consumer demand over the summer, this year has been weak in comparison, with both June and July showing the lowest sales on record for their respective months. And it’s not just high streets that are suffering, with non-food online growth also one percentage point below the 12-month average.

“The challenging retail environment is taking its toll on many high street brands who must contend with rising import costs, a multitude of public policy costs, and ever higher business rates. A coherent strategy for retail is needed. The government should freeze future business rates rises and fix the appeals system before embarking on a wholesale reform of this broken tax system.”

Paul Martin, UK head of retail of KPMG, added: “The UK may have had record temperatures in July, but retail sales were far from record-breaking at just 0.3% growth. While any growth is welcome after two months of decline, it’s clear that most players need more than sunshine to get back on their feet.

“Given the weather, it’s unsurprising that shoppers reconsidered their wardrobe, but it was online retailers who benefitted most once again. Online non-food sales overall actually grew by only 3.7%, which is considerably lower than previous years. Meanwhile, another category which has historically benefitted from the good weather is grocery. But even here sales are lacklustre, which is a cause for concern.

“With consumer confidence holding up in the face of prolonged Brexit uncertainly, shoppers are notably disengaged overall. The pressure continues to build between online and physical offerings, costs continue to rise, and the demands of consumers continue to grow. The key question is: who can handle the heat?”

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