Retail sales growth picked up in November after demand was boosted by Black Friday discounts and clothing for the colder weather.
The BRC-KPMG Retail Sales Monitor shows total growth was 4.2% last month compared to a rise of 1.6% in October. Like-for-like sales increased 4.1%, although the BRC noted that growth remained far below current inflation, suggesting volumes continued to be down on last year.
Over the three months to November, food sales were 5.8% on a total basis and 5.5% on a like-for-like basis. Non-Food retail sales were flat at 0.0% on a total basis and fell 0.4% on a like-for-like basis.
“As we enter the last crucial few weeks of the year, retailers will be hoping that consumers continue to focus on the Christmas feel good factor. For some struggling retailers hit hard as consumer confidence and spending declines, and costs continue to rise, the next few weeks could be critical to their survival,” said Paul Martin, UK Head of Retail at KPMG.
“Retailers are well aware that in the current environment it is a battle to attract and retain every customer. Given the economic headwinds for the year ahead, with consumer behaviour expected to evolve further as shoppers look to trade down and purchase less, understanding and meeting customer needs will be mission critical for retailers, and it’s a job that keeps getting harder.”
Commenting on the performance of the food & drink sector, Susan Barratt, CEO at IGD, said: “With inflation still driving accelerating top-line growth, the UK market continued to see real terms decline in November. However, that decline has slowed versus October with shoppers shifting into recognisable ‘seasonal’ mode as November wore on, while some additional demand also emerged as the World Cup got underway at the end of the month.
“Shopper trust in the industry to maintain good availability of food and groceries dropped to its lowest ever level in November. Well-publicised availability challenges in eggs and poultry may have influenced this decline. Indeed, the importance of animal welfare when choosing what to buy dropped to its lowest level since our record began in 2017, as shoppers were forced to choose to go without or buy a product with lower welfare standards.”
NAM Implications:
- Essentially, given the high rate of inflation vs Like-with-like sales…
- …retailers, especially non-food, are still in trouble…
- ..with many struggling and being pushed closer to the edge.
- (an adequate turnaround by Christmas is unrealistic for many)
- All of this leaves suppliers with the need to reassess credit risk, by customer…
- i.e. divide your outstanding credit balances by your Net Profit Margin, and multiply by 100
- = incremental sales required to recover from a customer going bust…
