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DISCOUNTING AND THRIFT ON THE HIGH STREET UK retail sales saw a marginal rise on a total basis in January, supposedly due to aggressive discounting by retailers during the month.
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ccording to the British Retail Consortium and KPMG, total sales increased 0.4% against an increase of 2.2% in January 2019, but like-for-like sales were flat, following a rise of 1.8% in the preceding year. Online, sales of non-food items increased by 2.5% against growth of 5.4% in January 2019, although the penetration rate continued to rise, up from 29.5% to 30.6%. Paul Martin, Partner, UK Head of Retail at KPMG, said: “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.” Chief Executive of the BRC Helen Dickinson said recent political uncertainty and a decade of austerity appear to have “ingrained a more thrifty approach” among shoppers. “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.” KPMG’s Martin added: “January is usually a quieter month for retail, and although static sales might not appear triumphant, at least it is no further deterioration.
NON-FOOD RESPONSIBLE FOR JANUARY SHOP PRICE DECLINE P
ressure on prices in the non-food sector of retail led to overall shop prices falling 0.3% in January compared to a 0.4% decrease in December. The figure is below the 12-month average decline of 0.0% and above the 6-month average of 0.5%, according to data from the British Retail Consortium and Nielsen. While food inflation accelerated to 1.6% in the first month of the year, non-food prices fell 1.5% – the same rate of decline as in December – prompting the BRC’s Chief Executive Helen Dickinson to assert that “shoppers will cheer”. The figures for non-food represent the continuation of a long-term trend. Mike Watkins, Head of Retailer and Business Insight at Nielsen, put the sector’s plight down to no inflationary pressure coming from the high street as shoppers remain nervous about spending. “Hence, discounting continues for many non-food retailers,” he added. Whilst promotions in Supermarkets returned to more normal levels after Christmas, Watkins said the non-food sector remains “embattled” with fierce price competition which looks set to continue.
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RETAIL AGONY: JOB LOSSES MOUNT AS SECTOR STRUGGLES
57,000
retail jobs were lost in the final quarter of 2019 following the worst year on record for
retail sales growth. Figures from the British Retail Consortium show that the three-month period represented the 16th consecutive quarter of year-on-year decline, but the fall of 1.8% was well below the 2.8% recorded in the same period of 2018. An earlier report from the Centre for Retail Research showed that more than 140,000 jobs were lost in the 12 months of 2019, up from 117,000 in 2018, with 2020 forecast to bring further losses of 171,669 jobs and store closures estimated to reach 17,565. The CRR said the retail crisis was caused by “high costs, low profitability, and losing sales to online shopping.” Commenting on the BRC’s Q4 Retail Employment Monitor, Chief Executive of the organisation Helen Dickinson said there were many challenges for retailers in 2019: “Businesses had to contend with the repeated risk of no-deal Brexit, a general election and the ongoing transformation of the industry, leading to weak consumer demand. As a result, employment has suffered in retail, the UK’s largest private sector employer.”
“WORST YEAR ON RECORD FOR RETAIL,” SAYS BRC
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igures released by the British Retail Consortium show 2019 to have been the worst year on record for retail sales with total sales for the twelve months down by 0.1%, compared with 1.2% growth in 2018. The year was also the first to show a wide-ranging decline in sales – this being reflected in the CVAs, shop closures and job losses the industry suffered in 2019. “It shouldn’t come Paul Kirkland, as a surprise to Director of Retail & retailers that total Hospitality at Fujitsu sales fell in 2019” UK, said: “It shouldn’t come as a surprise to retailers that total sales fell in 2019; from declining footfall as online competitors grow their market share, to the continued impact of the UK’s political and economic uncertainty, it was a particularly difficult consumer environment to navigate.” BRC’s Helen Dickinson elaborated: “Twice the UK faced the prospect of a no deal Brexit, as well as political instability that concluded in a December General Election, further weakening demand for the festive period.” “There are many ongoing challenges for retailers: to drive up productivity, continue to raise wages, improve recyclability of products and cut waste. However, this takes resources, so it is essential the new Government makes good on its promise to review and then reform the broken business rates system which sees retail pay 25% of all business rates, while accounting for 5% of the economy.”
