- UK retail sales were up 0.8% on a like-for-like basis from October 2012, when they had decreased 0.1% on the preceding year. On a total basis, sales were up 2.6%, against a 1.1% increase in October 2012.
- The 3-month average total growth (2.8%) is much closer aligned to the 12-month average of 2.7%, suggesting a more sustainable level has been reached.
- Food sales growth during the last three months averaged 2.0% – below recent levels of inflation – indicating shrinking volumes. Clothing experienced a decline in total sales for the first time since March, affected by unseasonably warm weather. Strong growth in Other Non-Food points to an encouraging start to the festive season.
- Online sales of non-food products in the UK grew 12.1% in October versus a year earlier. The online penetration rate was 18.3% in October, the highest level ever recorded by our Monitor over 23 months.
Helen Dickinson, Director General, British Retail Consortium, said: "It’s encouraging to see growth heading in the right direction again after a disappointing slowdown in September. Much of the improvement was driven by sustained demand for new games and gadgets, and there was also a strong showing for home accessories and textiles. In contrast, clothing sales fell for the first time since March, suggesting that many customers prioritised leisure and home improvements over refreshing their wardrobes until more autumnal conditions took hold.
"Consumer confidence paused in October, and while conditions remain challenging, the signs are that customers are managing their budgets well while allowing some leeway for occasional treats. Retailers will be looking to respond to this appetite for good value with a little luxury here and there in their promotions and product offerings for the Christmas period."
David McCorquodale, Head of Retail, KPMG, said: "October was another difficult month for retailers reminding us that recovery is a slow, relentless slog. Whilst the summer months hinted at increased consumer confidence, retailers will struggle to maintain a sustained sales recovery until wage growth outpaces price inflation. While confidence may lead consumers to browse, it’s cash that’s needed in the tills.
"The fight for market share in the food and drink space, whilst offering value for the consumer, reduced the 3-month growth figure below inflation. Clothing and footwear had a difficult month as temperatures refused to drop, whilst other non-food items such as electricals performed better, aided by the online channel.
"The next two months are vital with stock holdings, merchandising and margins being key to success. Shoppers seem reluctant to buy their gifts early and at full price and many may be delaying their purchases in the hope that retailers will discount festive goods as the big day nears. The pressure is on retailers to kick start sales, without the need to heavily discount. Christmas has always been retailers’ golden goose and a good performance in the next two months will help those in the red move back to the black."
Food & Drink sector performance – Joanne Denney-Finch, Chief Executive, IGD, said: "October’s total food and drink sales were moderately up compared to last year, with sales in the first half boosted by warm weather.
"While shoppers remain cautious, they’re prepared to put the effort in to secure the best deals. Six in ten (58 per cent) intend to shop around more this year than last to find the best deals at Christmas.
"And with the latest GDP figures showing encouraging growth, there are some signs of confidence returning. Around one in six (16 per cent) shoppers told us they expect to be better off over the next 12 months, compared with 11 per cent this time last year."
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 November 2013 Monitor, covering the four weeks 27 October – 23 November, will be released at 00.01am Tuesday 3 December 2013.
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. KPMG International provides no client services.
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