Supermarket price war, Andy Murray and royal baby effect impact July retail sales

The British Retail Consortium (BRC) said like-for-like retail sales were down 0.3% last month compared with July 2013, when like-for-likes were up 2.2% over the previous year.

Total sales last month were up 1.3%, compared with 3.9% last year. The three-month average total sales growth was also 1.3%, below the 12-month average of 2.3%.

The BRC said the ongoing grocery price battle, with resultant low food price inflation, led to a three-month average sales decline of 1.4% on a total sales basis, and 3.5% slump on a like-for-like basis. This represented the food sector’s deepest decline since BRC records began in December 2008.

In contrast, non-food sales reported growth of 3.4% over the three-month period.

In July last year retailers benefited from events including the birth of Prince George and feel-good British successes in the Ashes test series against Australia, Andy Murray’s Wimbledon tennis win and Chris Froome winning the Tour De France cycling event.

Helen Dickinson, director-general of the BRC, said: “This July we have achieved overall growth of 1.3% year on year, which at first glance compares unfavourably with the 2.3% long-term rate over the past 12 months.

“However, July last year was a tough month to beat because consumers had really responded well to high-profile exciting sporting events and, of course, the birth of the royal baby.”

Categories which bounced back after a dip during June included furniture, home textile, outdoor products, toys and baby products, she added.

David McCorquodale, head of retail at KPMG, added: “The tale of two sectors continues with polarisation between food and non-food.

“While non-food retailers had a stellar month, surpassing even last year’s record sales performance, the grocers’ sales tumbled in value as their competitive pricing continued.

“Fashion retailers are enjoying a better summer, even against tough comparatives that included a heatwave, royal baby and a British Wimbledon champion, and many have avoided the price cutting sprees seen last year.

“The grocers’ figures continue to make for gloomy reading for the sector. The impact of their prolonged discounting campaigns may be good news for consumers, but must be being felt deeply by the retailers given like for like sales have fallen in value every month for the past 12 months, save for April when Easter helped sales.

“The headache for the grocer investor is the tonic for the consumer: it’s likely these price wars are here to stay for the foreseeable future.”