Wednesday, July 8, 2020

June retail sales lifted by World Cup fever

A combination of warm weather and World Cup fever led to a rise in the sales of beer, BBQs and big TVs, though spending on other items fell.

In June, UK retail sales increased by 1.1% on a like-for-like basis from June 2017, when they had increased 1.2% from the preceding year, according to the British Retail Consortium (BRC) and KPMG.

On a total basis, sales increased 2.3% in June, against an increase of 2.0% in June 2017. This is above the 3-month and 12-month averages of 1.2% and 1.5% respectively.

Over the three months to June, In-store sales of Non-Food items declined 1.4% on a Total basis and 2.7% on a Like-for-like basis. This is an improvement over the 12-month Total average decline of 2.4%.

Over the three months to June, Food sales increased 0.3% on a like-for-like basis and 1.7% on a total basis. This is below the 12-month Total average growth of 3.7% but includes April, which was negatively distorted by the timing of Easter.

Over the three-months to June, Non-Food retail sales in the UK decreased 0.2% on a like-for-like basis and increased 0.8% on a Total basis. This is higher than the 12-month Total average decrease of 0.1% and the best 3-month average since September. It was the second consecutive month of growth in Non-Food.

Online sales of Non-Food products grew 8.5% in June, against a growth of 10.1% in June 2017. This is below the 3-month average of 9.0% but above the 12-month average of 7.9%. Online penetration rate increased from 22.3% in June 2017 to 23.3% in June 2018.

“The reality is that sales don’t grow on the feel-good factor alone,” said Helen Dickinson, BRC.

“With household incomes still barely growing faster than inflation, conditions for consumers and retailers remain extremely tough. And things could get tougher: once the euphoria of sporting success subsides, without a deal on Brexit, shoppers face the prospect of significant price increases and shortages of everyday goods.

“Even if England do go all the way, households may have little to celebrate come next April.”

Paul Martin, Head of Retail, KPMG, said:  “After May’s positive retail performance, June’s results turned out to be less buoyant than hoped for.

“Sales growth remained in positive territory for the second month running at 2.3%, but as the recent financials of key players’ highlights, sales growth and profitability don’t always go hand-in-hand.

“Grocers benefitted from the brighter weather and of course the World Cup, with barbeques and picnics firmly on the menu, and the weather and holiday season are also likely to be behind the uptick in online fashion sales too. But with so much attention outdoors, other household categories didn’t fare exceptionally well.

“The summer sunshine, Wimbledon and the on-going World Cup provide a strong foundation for growth in July, but retailers need to ensure that sales translate into profit. With the structural changes the sector is experiencing, as well as increased costs, this is becoming increasingly difficult to achieve.”

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