As expected, January proved a difficult month for retailers as bad weather and cost of living pressures discouraged shoppers from opening their wallets after Christmas.
Figures from the British Retail Consortium (BRC) and KPMG show total retail sales increased by just 1.2% year-on-year in January, against a rise of 4.2% in the same period last year.
Food sales increased 6.3% over the three months to January, which was below the 12-month average growth of 8.1%. Without giving a figure, the BRC stated that for January, food was in growth year-on-year.
Meanwhile, non-food sales slipped 1.8% over the quarter. This was steeper than the annual average decline of 0.5% after a fall last month.
The BRC noted that discounting during the January sales helped boost spending in the first two weeks of the post-Christmas period, but the trend was not sustained throughout the month. Larger purchases, such as furniture, household appliances, and electricals, remained weak as cost of living pressures continued, whilst milder temperatures meant clothing sales performed poorly.
“With the Spring Budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers,” said Helen Dickinson, Chief Executive of the BRC.
“Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’. By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”
Linda Ellett, UK Head of Consumer Markets, Leisure & Retail at KPMG, added: “It remains a difficult environment for retailers facing into significant downward pressures on demand, a strong promotional environment and uncertainty hitting supply chains due to rising geopolitical tensions. Retailers will be hoping that continued good news on the economy, coupled with the small boost given to some consumers as cuts in national insurance start to feed through to pay packets, will boost confidence and convert to sales.”
Meanwhile, commenting on the food & drink sector, Sarah Bradbury, Chief Executive at IGD, noted that the year had started on a positive note. “Despite most of the country bracing arctic conditions in the early part of January, grocery volumes have seen their largest year-on-year growth in over 12 months,” she said.
“This should, however, be viewed in the context of the market having endured a prolonged period of significant volume declines. Grocery sales remain in year-on-year growth, and with inflation slowing and further price cuts across the market, the rate of growth has remained relatively stable for the past three months.”
