Retail Sales Hold Up In August

In August, UK retail sales increased by 1.3 per cent on a like-for-like basis from August 2016, when they had decreased 0.9 per cent from the preceding year, according to the BRC – KPMG August Retail Sales Monitor

On a total basis, sales rose 2.4 per cent in August, against a decline of 0.3 per cent in August 2016, which had been the poorest performance of the year. This is the strongest growth since Easter, above the 3-month and 12-month averages of 1.9 per cent and 1.6 per cent respectively.

Over the three months to August 2017, in-store sales declined 1.4 per cent on a total basis and 1.9 per cent on a like-for-like basis.

Over the three months to August, food sales increased 1.8 per cent on a like-for-like basis and 3.2 per cent on a total basis. This continued to slow versus the three months to July of 3.4 per cent but remained above the 12-month total average growth of 2.7 per cent.

Over the three-months to August, non-food retail sales in the UK increased 0.6 per cent on a like-for-like basis and 0.9 per cent on a total basis, above the 12-month total average growth of 0.6 per cent.

Online sales of non-food products grew 11 per cent in August, above both the three-month and 12-month averages of 9.8 per cent and 8.8 per cent respectively. Online penetration rate increased from 21.0 per cent in August 2016 to 21.6 per cent in August 2017.

Helen Dickinson, chief executive of British Retail Consortium (BRC) said, “August provided a welcome pick-up in retail sales across channels, with non-food returning to growth as shoppers’ attentions turned to homewares, autumn clothing ranges and the new school term.

"However, these figures tell a less positive story about the health of consumer spending than it might seem at first glance. Non-food sales have only just recovered to levels seen two years ago, after a dismal August in 2016; while strong figures for food are largely the result of rising prices, leaving growth in volume terms weaker than last year.

Stark challenges lurk around the corner for the retail industry. Purchasing decisions are very much dictated by a shrinking pool of discretionary consumer spend, with the amount of money in people’s pockets set to be dented by inflation and statutory rises in employee pension contributions in a few months’ time. It’s therefore crucial to protect consumers wherever possible from further cost pressures. For Government, this includes ensuring continued choice and availability of affordable, quality products for shoppers post-Brexit, by securing a strong deal on customs and tariff-free trade with the EU.”

Don Williams, retail partner at KPMG said, "Despite the ongoing challenges for the industry, retailers achieved reasonable growth in August, which is positive news for the industry. Even non-food categories experienced an uptick – a welcome relief given the poor performance recently.

“Retailers taught us a thing or two about Back to School, with children’s clothes and footwear obtaining top-marks in terms of sales. Elsewhere, growth in home improvement sales – including furniture – point to the influence of staycations, although it could also be that home furnishing retailers are not having to compete with the likes of the Olympics for attention this year.

“Mirroring the successes of the high street, online sales continued to go from strength to strength, with all categories noting growth.

“Retailers have managed to achieve stronger than expected growth, however adding to this could be the fact that consumers appear to be turning a blind eye to the potential crush on spending power to come. The industry now needs to overcome further devaluation of the pound and the increased costs therein.”

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