UK retail sales were down 0.8% on a like-for-like basis from June 2013. Excluding Easter distortions, this is the lowest total growth recorded since May 2011, according to the latest figures from the British Retail Consortium (BRC).
Over the past three months, food showed almost no total growth, at 0.1%, in contrast with the growth of 1.1% experienced over the last 12 months. Non-food reported growth in line with the 12-month average of 3.7% over the last four months – which irons out Easter distortions. Online sales of non-food products in the UK grew 10.6% in June versus a year earlier.
BRC director general Helen Dickinson said: “Consumers continue to benefit from competitive pricing, which may be the cause of softer like-for-like sales in June. For retailers, it’s a bit of a mixed picture, with food sales down and non-food sales up but at a slower rate than in June. Are consumers pausing for a breath after the recent rush for revamping their homes? Could it be that they are feeling a touch more confident and have bought into fashion at full price, which in turn has encouraged some retailers to delay their summer sales? In this case, retailers may find that their margins are less affected than figures would suggest.
“The recovery is still on track. However, we are detecting differences in attitudes from customers, perhaps led by the competitive environment for food prices. Consumers are delighted to be saving on their food bills, but are prepared to spend a little bit more on discretionary items.”
KPMG Head of Retail David McCorquodale said: “Concern over a potential rise in interest rates is having a dampening effect on retail sales. June saw the brakes applied to spending as shoppers put purchases of big ticket items on hold whilst they waited to see if the Bank of England would take action on interest rates. Even sales of home accessories and furniture flat-lined, which is surprising given the UK is reportedly in the midst of a housing boom.
“Sales in the food sector also struggled, with England’s early exit from the World Cup exacerbating the grocers’ problems. The price war continues to take a heavy toll on the profitability of the sector, which saw sales decline in value again this month.
“Looking forward, retailers have two months of tough comparables coming up after Murray mania, a heatwave and the arrival of the royal baby boosted sales last year. This past performance will make like-for-likes look challenging over the next quarter.”