January retail sales reflect thrifty shopping
Total UK retail sales increased by +0.4% in January (against an increase of +2.2% in January 2019), according to the latest data from BRC-KPMG. LFL retail sales were flat YoY.
Sales of non-food products online increased by +2.5% in January (against a growth of +5.4% in January 2019). The penetration rate of online non-food products reached 30.^% (+1.1% YoY).
BRC chief executive Helen Dickinson OBE comments: “January saw a return to growth, however recent political uncertainty and a decade of austerity appear to have ingrained a more thrifty approach to shopping among consumers. Furthermore, as sustainability continues to rise up the agenda, many customers are switching to more environmentally friendly products or simply choosing to buy less. These effects are not just limited to the high street as growth in online purchases also slowed.
“Across the UK, retailers are facing tighter margins as a result of weak consumer demand and increasing costs, including sky-high business rates. We need to see a commitment from Government to bring down the overall burden of business rates in its upcoming review. In the short term, a move in the Budget to address Transitional Relief, which has seen retailers subsidising other industries by almost £500m since 2017, would prevent further shops closing and save jobs.”
Paul Martin, partner and UK head of retail at KPMG, adds: “January is usually a quieter month for retail, and although static sales might not appear triumphant, at least it is no further deterioration.
“Consumer confidence has started to return post-General Election, but we have not experienced any major leaps for the sector yet. We have to remember, this semi-positive performance will also be the result of aggressive discounts and consumers’ preoccupation with bagging a bargain. That’s not always good news when looking at bottom-lines.
“With Brexit ‘technically’ behind us, retailers will be hoping that consumers feel confident enough to reengage. But much remains unknown as we work towards defining our future relationship with the EU. Retailers are walking a tightrope between navigating any impact on their industry alongside ongoing changes in consumer behaviour.”
Furniture was the third best-performing category (down from 1st in 2019).