Retail sales edge up by 0.1% in October

UK retail sales increased by 0.1% in October on a like-for-like basis from October 2017, according to the latest statistics from the British Retail Consortium (BRC) and KPMG.

The monthly BRC-KPMG sales monitor reveals that on a total basis, sales increased 1.3% in October, against an increase of 0.2% in October 2017. This is above the 3-month average of 1.1%, but below the 12-month average of 1.4%.

Over the three-months to October, non-food retail sales in the UK decreased 1% on a like-for-like basis and increased 0.1% on a total basis. This is above the 12-month total average decrease of 0.2%. October non-food sales saw growth for the first time in four months.

In addition, in-store sales of non-food items declined 2% on a total basis and 3.3% on a like-for-like basis. This is above the 12-month total average decline of 2.4%.

Online sales of non-food products grew 7.6% in October, against a growth of 4% in October 2017, the lowest growth of 2017. This is above the 3-month and 12-month averages of 6.7% and 7.4% respectively. Online penetration rate increased from 25.7% to 27.6% in October 2018.

KPMG head of retail Paul Martin commented: “October kicks off the all-important golden quarter, with some retailers earning the majority of their annual profits in these months alone. But with October’s like-for-like sales flat lining at 0.1%, it was a bit of a non-starter.

“Demand was mainly dampened by continued economic uncertainty, as well as the anticipation for the deep discounting ahead – especially now that Black Friday weekend has become such a permanent feature.

“The Budget highlighted efforts to relieve some of the pressures on the high street, but didn’t go far enough to address the concerns of many retailers. With the potential implications of a hard Brexit added to the mix, retailers now need to juggle contingency planning alongside the busiest time of year.”

BRC chief executive Helen Dickinson OBE added: “Overall, retail sales growth remains low by historical standards. Sales in October saw only a slight uplift on the previous year, as cautious consumer spending continues into the final quarter of the year.

Brighter weather and the anticipation of better deals in the Black Friday November sales have dampened demand for discretionary purchases. Moreover, low real wage growth over an extended period has left consumers with less money in their pocket, squeezing retailers’ margins in the face of higher costs.

“Furthermore, the very real possibility of a no-deal Brexit presents a huge challenge for retailers who must contend with the prospect of higher import prices, and further drops to consumer demand.”

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