Biggest decline in retail sales since records began
October saw the deepest declines in retail sales since records began, according to the British Retail Consortium.
The BRC-KPMG Retail Sales Monitor revealed that UK retail sales fell by one per cent in October on a like-for-like basis, when they had increased by 1.7 per cent in the previous year.
On a total basis, sales rose by 0.2 per cent in October, compared with a growth of 2.4 per cent in October 2016. This was the lowest growth since May, according to the BRC.
In the three months to October, non-food retail sales in the UK fell by 0.4 per cent on a like-for-like basis and increased by 0.1 per cent on a total basis. This was below the 12-month average if growth of 0.2 per cent, which is the lowest since the monitor began in January 2011.
The monthly decline was also the deepest since BRC’s records began.
Zeroing in on the non-food sector, over the quarter, in-store sales of declined by 2.2 per cent on a total basis and 2.9 per cent on a like-for-like basis. On a 12-month basis, the total drop was 2.1 per cent, the deepest decline since January 2012 when BRC records began.
Online sales saw a slightly more positive outcome, increasing by four per cent on non-food products in October, but still below the three-month and 12-month averages of 8.7 per cent and 8.3 per cent respectively.
Despite growth, this was the lowest rate of online growth recorded since records began in December 2012.
The online penetration rate increased from 22.6 per cent in October 2016 to 23.7 per cent in October 2017, which was the highest penetration rate since December 2016.
BRC chief executive Helen Dickinson (pictured) said: “It was a meagre month in October for retail sales as shopping activity slumped. With total growth at its lowest since May and below the 12-month average, retailers will have cause for concern as they prepare for the crucial run-up to Christmas.
“The decline was driven by the worst performance of non-food sales since our records began in January 2011, as consumers appear to have opted for outdoor experiences and excursions during half-term, over visits to the shops.
“Real consumer spending power has been on a downward trend in the past year as the acceleration in inflation has caused shoppers to become ever more cautious in considering what purchases they can afford. Many now face higher borrowing costs, given the rise in interest rates, which will only serve to heap further pressure on to household finances.
“Considering the intrinsic link between consumer spending and economic growth, the Chancellor should reflect on this disappointing state of play and deliver a Budget that allays the risks of a further slowdown in consumer spending, by keeping down the cost of living. In other words, a shoppers Budget.”
Paul Martin, head of retail at KPMG, added: “October marked yet another reversal of fortunes for retailers, reinforcing just how volatile consumer spend has been. Despite the positive picture last month, these latest figures will be a real disappointment and not the start to the golden quarter retailers had hoped for.
“Overall growth online was lacklustre at best, although health and beauty products continued to stand out as a strong performer. The burning questions for retailers will be whether shoppers are holding off their purchases until Black Friday, and whether retailers can recover from this month’s poor performance to end the year on a high.
“With the Bank of England’s interest rate decision seeing the first hike in 10 years, we are likely to see a continuation of the sector’s slow-down, with consumers having less disposable income to spend. The autumn Budget also nears closer and retailers will most likely be hoping for some form of relief, particularly after the challenges business rates created.”