Retail sales ‘return to growth’ in January, says BRC

Total retail sales increased 0.4% during the five weeks to February 1. This was above the three- and 12-month average declines of 0.4% and 0.2% respectively.

However, the sales increase is below the 2.2% increase in January 2019 and the 12-month average hit a new low since records began in 1995.

UK retail sales were flat on a like-for-like basis during the period when compared with the previous year when they increased 1.8%.

Food sales fell 0.1% on a like-for-like basis but increased 0.6% on a total basis during the three months to January. This was below the 12-month average growth of 1.2% since, the lowest since February 2017.

In-store sales of non-food items fell 3% on a total basis and 3.3% on a life-for-like basis during the period. This was a slight uptick form the 12-month total decline of 3.1%.

BRC chief executive Helen Dickinson said: “January saw a return to growth, however recent political uncertainty and a decade of austerity appear to have ingrained a more thrifty approach to shopping among consumers.

“Furthermore, as sustainability continues to rise up the agenda, many customers are switching to more environmentally friendly products or simply choosing to buy less. These effects are not just limited to the high street as growth in online purchases also slowed. 

“Across the UK, retailers are facing tighter margins as a result of weak consumer demand and increasing costs, including sky-high business rates. We need to see a commitment from government to bring down the overall burden of business rates in its upcoming review.

“In the short term, a move in the Budget to address transitional relief, which has seen retailers subsidising other industries by almost £500m since 2017 would prevent further shops closing and save jobs.”

KPMG UK head of retail Paul Martin said: “January is usually a quieter month for retail, and although static sales might not appear triumphant, at least it is no further deterioration. 

“Consumer confidence has started to return post-general election, but we have not experienced any major leaps for the sector yet. We have to remember; this semi-positive performance will also be the result of aggressive discounts and consumers’ preoccupation with bagging a bargain. That’s not always good news when looking at bottom-lines.

“Health-focussed categories did benefit from consumers aiming to start the year with good intentions. Meanwhile, grocery sales – while still growing – were noticeably muted. This continues a trend we observed at the end of 2019, which could indicate more significant structural changes to the sector. Equally, online sales have also started 2020 with moderate growth. 

“With Brexit ‘technically’ behind us, retailers will be hoping that consumers feel confident enough to reengage. But much remains unknown as we work towards defining our future relationship with the EU. Retailers are walking a tightrope between navigating any impact on their industry alongside ongoing changes in consumer behaviour.”