The BRC-KPMG Retail Sales Monitor shows that price inflation offset a decrease in transactions last month as squeezed consumers cut their spending on large ticket items such as computers, TVs and furniture.
Total sales increased 2.2% in September, up from a 0.6% rise in the same month last year. Figures were boosted by sales of warm clothing, energy-efficient appliances and items such as blankets as consumers geared up for higher energy bills this winter.
However, it was another month of falling sales volumes, with warnings of a difficult time ahead for both retailers and consumers.
Paul Martin, UK Head of Retail at KPMG, commented: “With interest rates, inflation, labour, energy and costs of goods continuing to climb, retailers are heading into one of the most challenging Christmas shopping periods they have had to deal with in years. Consumer confidence remains low, and retailers are having to tread a very fine line between protecting their own margins and further denting confidence by passing on price rises. A laser focus on their own costs and efficiencies in order to remain price competitive this festive season will be essential.
“As consumers focus on getting value for money through switching to own brand items and seeking out discounts, getting pricing and promotional activity right could be the difference between a successful or dismal Christmas for retailers this year.”
The BRC-KPMG revealed that food sales grew 4.6% over the three months to September, compared with the same period last year, boosted by inflation. Meanwhile, non-food sales dipped by 0.4% over the quarter but increased over the month of September after a recovery in clothing.
Separate figures released today by Barclaycard showed spending on its credit and debit cards rose only 1.8% year-on-year in September, the weakest reading since February 2021 and far behind the annual 9.9% increase in consumer prices in August.
Nine out of ten people surveyed by Barclaycard said they were concerned by rising household energy bills.
Esme Harwood, director at Barclaycard, commented: “Energy price increases are understandably causing concern for Brits, as they worry whether they will have enough money to cover their household bills.”
She noted that consumers were cutting back on discretionary spending, with a knock-on effect for hospitality and retail.
NAM Implications:
- Apart from cutting back on discretionary spending, with a knock-on effect for hospitality and retail…
- …it looks like consumers are hunkering down for a Winter of Discontent.
- Meanwhile, ‘getting pricing and promotional activity right could be the difference between a successful or dismal Christmas for retailers this year’.
