Food Continues To Outperform Non-Food Sales As Shoppers Focus Spending On Essentials

The UK retail sector suffered a third consecutive month of falling sales in March, according to latest figures from the BRC and KPMG, adding to evidence that the recent rise in living costs is denting consumer spending.

Overall, year-on-year retail sales decreased by 1% on a like-for-like basis, although the BRC cautioned that the figures were distorted by the timing of Easter, which falls in April this year but was in March last year.  On a total basis, sales fell 0.2% in March.

Over the three-months to March, food sales decreased 0.2% on a like-for-like basis and increased 1.2% on a total basis. This is the first time in four months that the 3-month average total growth has been below 2.0%.

Meanwhile, non-food retail sales over the same period declined 1.1% on a like-for-like basis and 0.8% on a total basis, as demand for clothing, toys and household appliances weakened. This is the slowest 3-month total average growth since May 2011, and drags the 12-month total average growth to 0.3%, the lowest since April 2012.

Helen Dickinson, Chief Executive of British Retail Consortium, commented: “Mother’s Day gift purchases provided some compensation, boosting sales of beauty and stationary items in particular. Looking at the bigger picture though, the slowdown in non-food growth persists and it now stands at its lowest three-month average for nearly six years.

“Meanwhile, food sales continue to outperform non-food sales as shoppers focus their spending on essential items. This marginal growth in food was bolstered by slightly higher shop prices following increases in global food commodity costs and a weaker pound. The pressure on prices continues to build, albeit slowly, and will inevitably put a tighter squeeze on disposable income and so to ensure consumers continue to enjoy great quality, choice and value on goods, securing tariff free-trade must be the priority as the Brexit negotiations begin in earnest.”

Paul Martin, UK Head Of Retail at KPMG, added: “Retailers will be hoping Easter boosts retail sales in April, whether it’s shoppers making the most of the holiday or those choosing to spruce up their homes. The new tax year marks further pressure on margins in the form of the apprenticeship levy and business rate changes, therefore tighter cost management and a focus on efficiency is more important than ever.”