BRC-KPMG: healthy retail sales growth for January

Retail sales rose by 1.6% on a total basis in January compared with the year-ago period, according to newly released figures.

The latest BRC [British Retail Consortium]-KPMG Retail Sales Monitor shows that sales edged up 0.2% on a like-for-like basis from January 2014, when they had increased 3.9% on the preceding year.

Total food sales grew for the second consecutive month in January and showed a 0.2% rise over the last three months: the best performance since February 2014. The non-food performance was helped by the continuation of end-of-season sales into January.

Online sales of non-food products in the UK grew 11.7% in January versus a year earlier, when they showed an increase of 19.2%. The non-food online penetration rate was 18.4%, up from 16.8% in January 2014.

BRC director general Helen Dickinson said: “Retail sales have continued to grow with January reporting a respectable 1.6% increase. Looking into the numbers a little more closely gives us even more cause for optimism. Last year, retailers had a bumper January – so to see growth against such a tough comparison shows the industry to be in rude health. Customers were offered attractive bargains on winter ranges but it remains to be seen at what cost to the retailers’ margins.”

She added that shoppers were in the mood to buy products aimed at helping them lead healthier lifestyles, from fruit and vegetables to exercise equipment. “Given the time of year, this is no surprise,” she commented, “and retailers have capitalised by making sure they have the right stock, at the right price to help consumers achieve their New Year goals.”

KPMG head of retail David McCorquodale noted: “After a subdued December, retailers experienced a semi-revival in fortunes as shoppers took advantage of the bargains on offer in the January sales. The clothing, toys and household appliances sectors particularly benefitted from this spending spree, notching up year-on-year growth against tough comparables from the year before.

“These figures clearly demonstrate the difficult cycle that retailers are trapped in. Demand is now almost solely driven by discounts, with shoppers very reluctant to buy goods at full price in the hope that yet another sale could be just around the corner. This promotion-led environment risks becoming the new normal: retailers are struggling to persuade consumers to break the habit and go back to the traditional sales cycle.”