Storms take toll on February retail sales

On a total basis, UK retail sales increased by 0.1% year-on-year in February, while on a like-for-like basis, sales decreased 0.4%, according to research from BRC (British Retail Consortium)-KPMG.

Over the three months to February, in-store sales of non-food items declined 1.8% on a total and 1.9% on a like-for-like basis. This is better than the 12-month total average decline of 3.1% but positively distorted by the inclusion of Black Friday in December.

In the same period, non-food retail sales in the UK increased by 0.6% on a like-for-like and 0.7% on a total basis. For the month of February, non-food was in decline year-on-year.

Online non-food sales increased by 3.6% in February, against a growth of 5.4% in February 2019. This is above the 12-month average of 2.9%. Non-food online penetration rate increased from 29.1% in February 2019 to 31.1%.

BRC chief executive Helen Dickinson OBE commented: “Clouds continued to hang over the retail industry in February, as storms Ciara, Dennis and Jorge took their toll on retail sales, particularly in fashion. Despite many indicators suggesting a rise in confidence among UK shoppers in recent months, this failed to translate into higher retail sales. However, the end of the month saw a slight rise in spending on food and healthcare as a result of concerns around coronavirus.

“Retailers are working hard to reduce their environmental impact, keep supply chains working smoothly and investing in new technologies. However, they are hindered by government policies, such as sky high business rates, which limit investment.

“In [today’s] Budget we hope the Government will take the opportunity to relieve the business rates burden bearing down on the shoulders of the industry. Scrapping downwards phasing of transitional relief, which has forced retailers to subsidise other industries by almost £550 million over the last three years, would allow more money to be invested back into people, property and technology all over the UK.”

Paul Martin, UK Head of Retail of KPMG, added: “Returning consumer confidence has done little to benefit retailers, with February’s sales growth down 0.4% on a like-for-like basis. The highly anticipated ‘Boris Bounce’ has clearly struggled to materialise in the embroiled retail sector, and looking ahead Covid-19 isn’t likely to help matters.

“Subdued grocery has shown a slight recovery, although the edging up of prices will have contributed to that growth. In the short-term, any potential supply chain disruption caused by Covid-19 will be felt acutely by grocers, so developments will have to be watched closely.

“February saw the UK get hit by one storm after another, so it’s unsurprising that online fared fractionally better than the high street. Generally though, demand for non-food items remains woefully low.

“The coming weeks will be of key importance to the sector. Retailers will be hoping that the Chancellor can provide stability and certainty after prolonged volatility and uncertainty. Business rates will be front of mind for many, but it remains to be seen whether any form of relief will be offered. Even then, that relief could be too little too late for some of those struggling.”