Retail sales fall back during August
UK retail sales fell in August as cash-strapped consumers held back from spending on non-essential items said the British Retail Consortium today.
The BRC said like-for-like sales fell 0.6% during the month compared with a year earlier. Total sales were up 1.5%, compared to a 2.8% increase in August last year.
Food sales growth was of a similar to to July but non-food sales fell further below their year-earlier level, with footwear and homewares showing the largest declines.
Non-food non-store (internet, mail-order and phone) sales growth was the best since April with sales up 12.6% higher than a year ago, after a relatively weak 9.6% in July but 17.8% in August 2010.
Stephen Robertson, director general, British Retail Consortium, said:
“The retail sector’s performance for August has been essentially flat, particularly bearing in mind the increase in VAT which will be responsible for some of the growth in spending. It remains a tale of two halves. The food sector has proved more resilient but non-food retail showed a marked decrease in sales year-on-year.
“The spell of hot weather at the start of the month was a boost for some retailers but it failed to last long enough to make a big impact. People had bought summer fashions early during the Spring heatwave and were reluctant to spend again while families left the traditional back-to-school purchases until late in the month, possibly hoping to benefit from further promotions.
“The riots were not widespread or prolonged enough to have a significant impact on these UK-wide figures. Poor consumer confidence, high inflation and the on-going squeeze on personal finances remain the biggest threats to the retail sector. Sales of big-ticket items are very dependent on discounting and many retailers’ margins are being cut to the bone.”
Helen Dickinson, head of retail, KPMG, said:”The weaker sectors are really struggling. For non-food, the picture is disheartening with one of the worst monthly results of the year thus far – toiletries, cosmetics, and menswear the only sectors showing growth.
“The differential between food and non-food performance continues to grow with food sales in value terms remaining relatively resilient. Given that much, if not all, of the growth is inflation and a higher VAT rate versus last year, this isn’t particularly good news for retailers as they struggle to maintain their margins.
“Promotional activity remains high to drive footfall and interest which is a delicate balancing act for retailers to ensure the volume uplift compensates for the margin losses.”
