‘Ongoing Brexit uncertainty’ holds back September spending

Total retail sales fell by 1.3% in September against an increase of 0.7% in September 2018, according to the latest figures from the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.

The BRC said this is below the 3-month average decline of 0.4% and the 12-month average growth of 0.2%: a new record low. It is also the worst September since BRC records began in 1995.

UK retail sales decreased by 1.7% on a like-for-like basis from September 2018, when they had decreased 0.2% from the preceding year. This is worse than both the 3-month and 12-month averages of -0.8% and -0.4% respectively – and the lowest 12-month average since August 2009.

Over the three months to September, in-store sales of non-food items declined 3.2% on both a total and like-for-like basis. This is worse than the 12-month total average decline of 2.9%.

Online sales of non-food products grew 0.7% in September – but this statistic is the worst ever recorded. It was against a growth of 5.4% in September 2018. The 3-month and 12-month average growths were 2.1% and 3.8% respectively.

Overall, in the same three-month period, non-food retail sales in the UK decreased by 1.7% on both a like-for-like and total basis. This is below the 12-month total average decrease of 1.0%, which is a new record low. For the month of September, non-food was in decline year-on-year.

BRC chief executive Helen Dickinson OBE commented: “With the spectre of a no-deal weighing increasingly on consumer purchasing decisions, it’s no surprise that sales growth has once again fallen into the red. Many consumers held off from non-essential purchases, or shopped around for the bigger discounts, while the new autumn clothing ranges suffered from the warmer September weather. The longer-term prospect continues to be bleak, with the 12-month average once again plumbing new depths at a mere 0.2%. Online non-food sales growth was the lowest on record, though still compared favourably to the decline in growth at physical stores.

“With four months of negative sales growth since March, the ongoing political gridlock surrounding Brexit is harming both consumers and retailers. Clarity is needed over our future trading relationship with our closest neighbours, and it is vitally important that Britain does not leave the EU without a deal.”

KPMG UK Head of Retail Paul Martin added: “Unsurprisingly September proved to be another difficult month for retailers, with like-for-like sales declining by 1.7% compared with last year. Worryingly, even online sales moved closer to stalling, with growth of non-food online sales only 0.7%.

“Ongoing Brexit uncertainty is clearly having a material impact on the consumer psyche, with all but one non-food category being in decline in September. Consumers are choosing to focus on the essentials, with food one of the few categories delivering growth. We will likely experience increased promotional activity to clear surplus stock, which doesn’t bear well for retailers desperately trying to make up for lost ground after several difficult months.

“Retailers’ focus needs to be on cost and efficiency with only the leanest and most efficient operations coping with this extreme test of endurance. October, and the ramping up of Brexit plans, will clearly be a real test for the industry as a whole.”

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