Overall Retail Sales Weaken But Food Sector Benefits From Warm Weather

Overall retail sales weakened in August as the Olympics and outdoor activities diverted shoppers’ attentions, although the food sector benefited from the warm weather.

The data from the BRC – KPMG Retail Sales Monitor showed that sales fell by 0.9% on a like-for-like basis from the same month last year. That compared with growth of 1.1% in July and was the weakest performance since April.

On a total basis, sales declined 0.3%, the weakest performance since September 2014, excluding Easter distortions. On a three-month basis, total UK retail sales rose 0.6%, half the rate of the 12-month average of 1.2%.

On a three-month basis, total food sales increased 0.9%, fuelled by demand for picnic, barbeque supplies and celebratory drinks. This was the sectors best performance since December 2013 excluding Easter distortions, well ahead of the 12-month average of 0.3%.

Meanwhile, on a three-month basis, total non-food sales rose 0.4%, a significantly slower rate than the 12-month average of 1.9%. The BRC said the slowdown – affecting most categories – was driven by lower footfall due to the warmer weather enticing consumers towards leisure and outdoor activities rather than shopping – suggesting this trend is likely to be short-lived.

Helen Dickinson, Chief Executive of the British Retail Consortium, commented: “Care should be taken in reading too much into August’s lacklustre performance. As we’ve seen in the last couple of months, data portending the health of the economy paint a volatile picture. The fact is that so far little has directly changed for the UK’s consumers as a result of the referendum, so it’s the pre-existing market dynamics that are still driving sales. The slowdown in real wage growth in the first half of 2016 and strong competition will continue to weigh on trend growth in total sales; whilst holiday timings, promotional and seasonal activity will contribute to fluctuations month on month.”

David McCorquodale, Head of Retail at KPMG, added: “In contrast to July, August’s retail figures illustrate somewhat of a u-turn of retail fortunes. Given the volatility of retail sales in the past few months, no doubt retailers will be hoping for a smoother ride in the lead up to Christmas.”

Commenting on the performance of the food & drink, Joanne Denney-Finch, Chief Executive at IGD, said: “A strong August for sales under mainly blue skies completed a good summer for grocery retailers, with the best underlying three-month growth for more than two years.

“Although 51% of shoppers feel that the next 12 months is a time for them to play it safe in financial terms, this does not seem to be curtailing overall spending on everyday items like food and groceries.”