BRC-KPMG: UK retail sales ‘below expectation’ in April

UK retail sales increased by 3.7% on a like-for-like basis last month from April 2018, when they had decreased 4.2% from the preceding year, according to the latest data from the British Retail Consortium (BRC)-KPMG.

Covering the four week period from March 31 to April 27, BRC-KPMG noted that the figures are ‘positively distorted by the timing of the run-up to Easter, which was in April this year compared with March in the previous year. One way of correcting for this distortion is to look at the two-year average, since the Easter effect was reversed last year, depressing sales in April 2018’.

On a total basis, sales increased by 4.1% in April, against a decrease of 3.1% in April 2018. This was above both the 3-month and 12-month average increases of 1.2% and 1.4% respectively. The two-year average growth, which corrects for the Easter distortion, was 0.4% per annum, a slowdown from March’s equivalent of 0.9%.

BRC chief executive Helen Dickinson OBES said: “Retail sales were below expectation in April, as the sunshine over the Easter weekend persuaded many to pursue recreational, rather than retail, activities. Department stores, as well as clothing and footwear shops, were harder hit by the warmer weather, while food-to-go fared much better from it.

“Online accounted for a little under 30% of all non-food sales, and we expect this proportion to continue to rise. Nonetheless, the pace of growth has slowed over the course of the year despite the investment that many stores have made in their digital offering.

“Retailers are continuing to invest in technology across both physical and online activities, as they seek to meet changing consumer behaviours. However, some of such spending is being held back by the plethora of government-imposed business costs bearing down on the industry. Government should review these costs – and in particular reduce the burden of business rates – if they wish to see retail maintain its place as the main provider of highly valued, flexible jobs in communities up and down the country.“

KPMG UK head of retail Paul Martin added: “Retailers reaped the rewards of Easter and more favourable weather in April, with like-for-like sales up 3.7% year-on-year. However, we must remain mindful of the distortion caused by Easter’s timing.

“Looking at sub-categories, food retailers were clear winners as families came together for festive feasts and even braved their first picnic or barbecue of the year. The long weekend also helped children’s toys and furniture sales, as parents looked to keep youngsters entertained as they returned to home and garden improvements.

“April may have eased the strain on retailers somewhat, but we can’t overlook the fact that the new tax year also presents retailers with additional costs, ranging from increased minimum wages to additional pension contributions. The task of balancing sales and a profitable margin remains crucial, especially given the widespread promotional activity currently.”

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