Disappointing Month For Retail Sales But Too Early To Assess Impact Of Brexit

The latest BRC-KPMG Retail Sales Monitor shows that sales were down 0.5% in June on a like-for-like basis, although the poor weather rather than the result of EU referendum was blamed on the disappointing figures.

Total sales edged up 0.2% with weak clothing sales offset by demand for furniture and home accessories as consumers attention shifted indoors to escape the wet weather. The BRC said that while sales slowed towards the end of the month following the EU referendum, it was too early to define this as a trend.

BRC Chief Executive Helen Dickinson commented: “Britain’s retailers remain open for business. The EU referendum vote has not changed their relentless pursuit of delivering for customers day in, day out or their investment in meeting the needs of fundamental changes in the way people shop, driven by digital and technology. Despite the fall in the pound, the time it takes for any input price increases to translate into higher shop prices will depend on a combination of factors including further changes in the pound, commodity prices and the challenge for retailers to move pricing given the intensity of competition. So, there won’t be any instant shocks as any changes would take time to feed through.”

David McCorquodale, head of retail at KPMG, added: “While the ramifications from the Brexit vote may well affect consumer confidence, retailers will be hoping the long-promised heatwave and potential stay at home holidays will be enough to drive shoppers back to the high-streets over the months ahead.”

Meanwhile, Euro 2016 gave the grocers a bit of a boost, with sales improving 0.8% in the three months April-June. However, like-for-likes continued to decline, suggesting food and drink sales continue to be dragged down by the deflationary tide in the sector.

Commenting on the performance of the food & drink sector, Joanne Denney-Finch, Chief Executive of IGD, said: “The surprise result of the referendum appeared to trigger an immediate drop in food and drink spending, which more than offset some modest sales growth earlier in the month. Hopefully, this will prove to be a short-lived shock and calmer waters lie ahead.”

NAM Implications:
  • NAMs need to act today, so what-if analysis can provide possible pointers
  • It may take some time, (think order-cycle i.e. fresh produce faster than ambient, etc.) for changes to filter through…
  • Worth conducting appropriate what-ifs for your categories now, instead of awaiting the official stats…?