- UK retail sales values were down 0.3% on a like-for-like basis from January 2011, when sales had risen 2.3%, picking up after December 2010’s snow disruption. On a total basis, sales were up 2.1%, against a 4.2% increase in January 2011. On both measures it was the second-worst January, after January 2010, since the survey began in 1995.
- Food sales slowed sharply after their Christmas boost. Non-food also weakened and any gains were largely driven by widespread heavy discounting in clearance sales. For clothing, footwear and homewares, January was worse than December, especially for larger purchases, hit by consumer caution.
- Non-food non-store (internet, mail-order and phone) sales growth slowed again after picking up sharply in December. Sales were 11.3% up on a year ago, less than December’s 18.5% gain but similar to the 12.3% in January 2011.
Stephen Robertson, Director General, British Retail Consortium, said:
"As 2012 gets underway, it’s clear people don’t feel any better about the immediate future than they did 12 months ago. Customers parked their worries in December and spent, encouraged by discounts. Now, in the New Year, reality has bitten again as concerns about jobs, wages and household costs reassert themselves.
"Despite consumer confidence improving in January, actual spending shows households concentrating on paying off debt, saving and battening down for another tough year.
"Food sales grew faster than non-food but the gap was much narrower than in December as people cut back and searched out grocery offers and value lines. Big-ticket goods are still the weakest part of retailing, undermined further by the comparison with last year when beating the VAT rise and promotions linked to it helped sales.
"In 2011 overall like-for-like growth averaged virtually zero and that was with a boost to top line figures from inflation, including the higher VAT rate, which won’t continue in 2012. Against that background, Government must hold down the costs it’s responsible for."
Helen Dickinson, Head of Retail, KPMG, said:
"After a stronger than expected December, these latest figures are rather sobering. The return to negative like-forlike sales reflects the trend seen throughout most of 2011 and is a stark reminder of the challenges facing retailers.
"Both food and non-food had a slow start to the month. In the first week of January customers were still using up stocks of food bought in for Christmas. Non-food didn’t benefit from the catch-up shopping effect we saw last year in the aftermath of December 2010’s snow disruption. Both categories improved as the month developed.
"But the underlying health of the sector remains a key concern, with margins and profits squeezed by the relentless need to discount to generate demand. Many retailers are rethinking their entire business models in a desperate attempt to adapt to this low growth environment and pricing remains more strategic than ever before."
Food & Drink – Joanne Denney-Finch, Chief Executive, IGD, said:
"People splashed out on their festive food and drink, so we would expect January’s sales to be less dramatic as shoppers reassessed their post-Christmas finances. Although the tough trading conditions continue, total food and drink sales were still higher than in January 2010. "Consumers are adapting to the era of austerity by being more proactive about securing the best deals. Our research shows, seven in ten shoppers now rate promotions as very important when choosing what stores to shop in, while 58 per cent say they bring coupons with them when doing their main grocery shop."
Non-Food Non-Store* - Stephen Robertson, Director General, British Retail Consortium, said:
"January has marked a return to reality for shoppers and for retailing in all its forms. Nonfood non-store retailing strengthened in the run-up to Christmas but these figures show consumers have reined in their spending since and business has returned to much closer to the 12-month average.
"The underlying factors which are affecting overall retail spending are also taking their toll online. Sales are being driven by high levels of discounting as cautious customers try to balance their budgets. Massive growth in online retail searches is not translating into the same rate of sales growth, showing people are shopping around and making careful decisions about what to buy."
Notes
The BRC-KPMG Retail Sales Monitor measures changes in the actual value (including VAT*) of retail sales, excluding automotive fuel. The Monitor measures the value of spending and hence does not adjust for price or VAT changes. If prices are rising, sales volumes will increase by less than sales values. In times of price deflation, sales volumes will increase by more than sales values.
Retailers report the value of their sales for the current period and the equivalent period a year ago. These figures are reported both in total and on a ‘like-for-like’ basis.
* VAT changes: from 17.5% to 15% on 1st Dec 2008; to 17.5% on 1st Jan 2010; to 20.0% on 4th Jan 2011.
Total sales growth is the percentage change in the value of all sales compared to the same period a year earlier. The total sales measure is used to assess market level trends in retail sales. It is a guide to the growth of the whole retail industry, or how much consumers in total are spending in retail – retail spending represents approximately one-third of consumer spending. It is this measure that is often used by economists. Many retailers include distance sales as a component of total sales.
'Like-for-like' sales growth is the percentage change in the value of comparable sales compared to the same period a year earlier. It excludes any spending in stores that opened or closed in the intervening year, thus stripping out the effect on sales of changes in floorspace. Therefore like-for-like sales growth will always be lower than total sales growth. Many retailers include distance sales as a component of like-for-like comparable sales.
The like-for-like measure is often used by retailers, the city and analysts to assess the performance of individual companies, retail sectors and the industry overall, without the distorting effect of changes in floorspace.
Non-Food Non-Store sales are transactions which take place over the internet, or via mail order or via telesales. Non-Food Non-Store sales growth is the percentage change in the value of all non-food non-store sales compared to those in the same period a year earlier. It is a guide to the growth of sales made by this non-store channel. It should be noted that Nonfood Non-store sales are still a very small proportion of total UK retail sales. Estimates based on ONS figures show about 8 per cent of total UK retail sales (food and non-food) are achieved via the non-store channel.
The responses provided by retailers within each sales category are weighted (based on ONS weightings) to reflect the contribution of each category to total retail sales, thus making it representative of UK retail sales as a whole. Because the figures compare sales this month with the comparable period last year, a seasonal adjustment is not made. However, changes in the timing of Bank Holidays and Easter can create distortions, which should be considered in the interpretation of the data.
As well as receiving sales value direct from the retailers in the scheme the BRC-KPMG Retail Sales Monitor also receives food and drink sales value data from the IGD's Market Track Scheme.
In its role as sponsor of the BRC-KPMG Retail Sales Monitor, KPMG is responsible for the aggregation of the retail sales data provided by the retailers on a weekly basis. This data consists of the relevant current week’s sales data and comparative sales figures for the same period in the prior year. The aggregation has been performed by KPMG on data for periods following 2 April 2000 and equivalent prior periods. The accuracy of the data is entirely the responsibility of the retailers providing it. The sponsorship role has been performed by KPMG since 10 April 2000 and save for the aggregation of comparative sales figures for the period from 2 April 2000 it is not responsible for the aggregation of any data included in this Monitor relating to any period prior to 2 April 2000. The commentary from KPMG is intended to be of general interest to readers but is not advice or a recommendation and should not be relied upon without first taking professional advice. Anyone choosing to rely on it does so at his or her own risk. To the fullest extent permitted by law, KPMG will accept no responsibility or liability in connection with its sponsorship of the Monitor and its aggregation work to any party other than the BRC.
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The February 2012 Monitor, covering the four weeks 29 January – 25 February, will be released at 00.01am Tuesday 6th March 2012.
The data is collected and collated for the BRC by KPMG.
The British Retail Consortium (BRC) is the UK's leading retail trade association. It represents the full range of retailers, large and small, multiples and independents, food and non-food, online and store based
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