- UK retail sales were up 3.9% on a like-for-like basis from January 2013, when they had increased 1.9% on the preceding year. On a total basis, sales were up 5.4%, against a 3.0% increase in January 2013, the strongest growth since March 2010.
- The 3-month average total growth was 3.2%, back in line with the 12-month trend, now at 3.0%.
- Furniture was the top performing category, achieving its best growth since April 2006, while Other Non-Food was the key contributor to overall growth.
- Online sales of non-food products in the UK grew 19.2% in January versus a year earlier, the strongest January since 2009. The online penetration rate achieved 17.4% in January.
Helen Dickinson, Director General, British Retail Consortium, said: "Our figures for January show strong growth but a story of two halves. With a record number of people now in work and the continued recovery in the housing market we have seen very strong performances in furniture and other non-food items. These figures are better than expected given the continued squeeze on personal finances but official figures show that this is not built on personal debt which remains below pre-recession levels.
"Customers responded enthusiastically to a range of sales and promotions on non-food items this January. Retailers succeeded in tempting shoppers in with promotions, they also saw strong demand across new ranges, helped by improvements in consumer confidence. This was not the case in food which in contrast saw very low levels of growth in the last quarter.
"January’s figures set 2014 off to a good start; however comparisons are against soft non-food sales in January 2013, which will not be the case in February. Given the underlying conditions, it remains to be seen how the trend for the rest of the year will pan out."
David McCorquodale, Head of Retail, KPMG, said: "These figures mark a strong start to the year for retailers. Most will take much from the positives and see genuine light at the end of the tunnel. However, behind the scenes some have had to discount heavily to secure these sales and will now be counting the cost of this strategy. Others have genuinely beaten expectations.
"Other than the grocers, retailers will feel heartened by these post-Christmas figures. The divide between food and non-food is stark, with the battle for market share in food remaining ferocious, customer loyalty fickle and cost deflation being passed through to the consumer.
"In non-food, there were a number of factors at play, all of which helped to boost sales. The weather in January 2014 was wet and windy but not, from a retail point of view, disruptive, snowy and cold like last year. A strong performance in furniture, flooring and home accessories hints that the recovery in house prices is having a positive knock on effect. The early weeks of the month reflected strong growth in clothing and other non-food, hinting that post-Christmas sales campaigns had boosted the top line: only time will tell at what cost to the bottom line."
Food & Drink sector performance – Joanne Denney-Finch, Chief Executive, IGD, said: "Rising expectations for the economy weren’t reflected in food sales and this was partly to do with the wettest January on record.
"A slowdown in food price inflation has affected these figures and it seems shoppers have noticed. A quarter now expect food prices to stay steady or decline slightly over the next 12 months - up from 14% who predicted this a year ago.
"While signs of economic recovery continue to emerge, food and drink retailers will hope they translate in to a buoyant Valentine's Day and perhaps some Winter Olympics parties over the coming weeks."
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.
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 (LFL) 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. 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.
Online (including mail order and phone) sales of non-food are transactions which take place over the internet, or via mail order or phone. Online sales growth is the percentage change in the value of online sales compared to those in the same period a year earlier. It is a guide to the growth of sales made by these non-store channels. It should be noted that online sales are still a small proportion of total UK retail sales. Estimates based on ONS figures show about 10 per cent of total UK retail sales (food and non-food) are achieved via the internet.
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 the same 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 aggregation of data for the weighted ‘online’ figures has been performed by the BRC and KPMG for periods starting 25 November 2012 and equivalent prior year periods. Prior to that date, the online figures in this monitor refer to the unweighted non-food non store indicator, as published in the BRC-KPMG Retail Sales Monitor until July 2013.
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 2014 Monitor, covering the four weeks 2 February – 1 March, will be released at 00.01am Tuesday 11 March 2014.
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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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 10,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in more than 156 countries and have more than 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
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