- UK retail sales were up 0.5% on a like-for-like basis from May 2013, when they had increased 1.8% on the preceding year. On a total basis, sales were up 2.0%, against a 3.4% rise in May 2013.
- Clothing was the best performing category, reporting its highest growth since December 2011, while Food was the lowest, reporting a decline in total terms.
- The 3-month average year-on-year change for Food was -0.2% in total, turning negative for the first time since our record began in 2008, excluding Easter distortions. For Non-Food, the 3-month average was 4.3%, ahead of the 12-month trend of 3.8%.
- Online sales of non-food products in the UK grew 17.0% in May versus a year earlier. The Non-Food online penetration rate was 18.7% in May, the second highest recorded, after last November.
Helen Dickinson, Director General, British Retail Consortium, said: "This quarter sees overall growth in the retail economy with non-food items accelerating: their three-month average growth was 4.3 per cent against the twelve-month figure of 3.8 per cent.
"Customers took advantage of great summer fashion ranges and clothing sales had their best results since December 2011, performing better than any other category. There is also strong momentum in big ticket sales such as consoles and televisions as customers feel confident enough in the economy to make purchases that had been on hold, waiting for economic recovery.
"But there is a very clear pattern in food sales emerging where customers continue to be discerning in search of value. Supermarkets are providing great quality food in a very competitive market and this shows in the three-month average food growth, which turned negative for the first time since our records began in 2008 (excluding Easter distortions). Let’s hope this rebalancing will eventually be rewarding for retailers."
David McCorquodale, Head of Retail, KPMG, said: "The recovery is gaining pace in the retail sector, but the latest figures reveal the scale of the paradox that has emerged. While non-food retailers are seeing steady sales growth, the grocers appear locked in a race to the bottom, imposing price cut after price cut to maintain their sales volumes. This price war is hindering the retail sector’s overall recovery, which without the effects of these cuts would have seen like for like sales growth outpace inflation over the last quarter.
"With Easter distortions now behind us, the non-food sector is showing encouraging signs of growth with total sales growing by more than 4 per cent over the last quarter. Clothing and footwear led the charge, although furniture and flooring sales are also encouragingly higher than inflation for the quarter. Consumer confidence can still be fickle, but the response to targeted campaigns has been positive. Retailers are investing in their businesses and planning for further growth at home and abroad.
"The main barrier to recovery is now the grocers’ battle over price. The deflationary effect of these prolonged discounting campaigns, whilst good for consumers, is feeding through to the grocers’ margins and share values. The constant price matching brings into question the long term value of the grocers’ brands and positioning, but in the short term is providing the UK consumer with plenty of options."
Food & Drink sector performance – Joanne Denney-Finch, Chief Executive, IGD, said: "Although there was one encouraging week in the middle of the month, overall food and grocery sales for May were a further disappointment.
"For food retailers, it will be essential to capitalise on opportunities provided by the summer events and the World Cup in particular. Our ShopperVista research shows that six in ten shoppers are inspired by such events to buy different food and drink."
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 June 2014 Monitor, covering the five weeks 1 June – 5 July, will be released at 00.01am Tuesday 15 July 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.
Sponsored and Administered by
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 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. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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