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Industry News Health of UK retail steadies in quarter two, says Retail Think Tank

Published on July 11th, 2017 | by The GC Team

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June weather delivers retail sales uplift

UK retail sales rebounded in June following a challenging performance in May.

The BRC-KPMG Retail Sales Monitor covering the period from 28th May to 1st July shows a like-for-like increase of 1.2%, compared to a decline of 0.5% in June 2016.

Total sales rose 2.0% against growth of 0.2% last year.

Chief Executive of the British Retail Consortium Helen Dickinson said the arrival of summer provided a welcome pickup for sales, “particularly to non-food categories, which saw a reversal in fortunes after a prolonged period of sluggish growth.”

Over the three months to June, food sales increased 3.6% on a like-for-like basis and 4.7% on a total basis. This is the strongest 3-month average since February 2012, and pulls the 12-month total average growth to 2.5%, the highest since December 2013.

Non-food sales in the same period increased 0.9% on a like-for-like basis and 1.2% on a total basis, above the 12-month total average growth of 0.6%.

Online sales of non-food products grew 10.1% in June, compared to 9.0% a year earlier. Over the three-months to June, online non-food sales rose 8.4%, while in-store sales declined 0.7% on a total basis and 1.2% on a like-for-like basis, a better performance than the like-for-like 12-month average decline of 2.0%.

The BRC’s Dickinson said: “The six-month average, buoyed by June’s strong performance, now paints a slightly rosier picture for retail sales. But on closer inspection, the year-on-year numbers belie the fact that rising food prices are responsible for the main component of growth and have prompted more cautious spending towards discretionary non-food items.

“Online continues to take the lion’s share of growth, although contribution from stores increased slightly in June as it seems shoppers headed out with specific purchases in mind, rather than just to browse.

“Looking ahead, there’s a question mark over whether this spending momentum will last, as household expenditure is increasingly squeezed from rising inflation and slowing wage growth.”

Paul Martin, UK Head of Retail at KPMG, said retailers would be wise to remain cautious. “Whilst the latest figures are definitely more favourable than last month’s, retailers must look at the bigger picture. Inflation and household debt are fuelling part of this retail growth; meanwhile, the industry is undergoing significant structural changes more broadly. The retailers succeeding are those embracing change.”

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