Retail sales ‘come down with a thump’ in May

May saw falling UK retail sales, indicating a decline in consumer spending power, according to new figures.

The BRC-KPMG Retail Sales Monitor showed that UK retail sales decreased by 0.4 per cent in May on a like-for-like basis from May 2016, when they had increased by 0.5 per cent over 2015.

On a total basis, sales rose 0.2 per cent in May, compared with growth of 1.4 per cent a year earlier. This is the lowest level since January 2017.

Looked at over the three months to May, non-food retail sales in the UK fell by 0.3 per cent on a like-for-like basis and increased by 0.1 per cent on a total basis.

May’s total non-food performance was the worst recorded since May 2011.

According to the BRC-KPMG Online Retail Sales Monitor, online sales of non-food products may well have grown in the UK by 4.3 per cent in May, but this was a significant drop from the 13.7 per cent rise a year earlier. In fact it was the lowest growth rate recorded since December 2012. In-store sales, by comparison also saw declines of 1.8 per cent on a total basis in the three months to May, and fell 2.3 per cent on a like-for-like basis.

In the three months to May, online UK retail sales grew by seven per cent year on year, which is the lowest level since the monitor began in December 2012.

In May, online sales represented 22.1 per cent of total non-food sales in the UK.

British Retail Consortium chief executive Helen Dickinson (pictured) commented: “After the pick-up in sales over Easter, consumer spending slowed again in May resulting in almost flat growth on the previous year. Underneath the headlines, there’s continued variation in the performance of food versus non-food products, as sales performance of the two become increasingly polarised. Food sales, albeit positively distorted by inflation, continue to see annual growth, while in non-food categories which are predominantly capturing discretionary spending, retailers find themselves having to compete even harder.

“Overall, May’s sales slowdown is indicative of a longer-term decline in consumer spending power. As household budgets become increasingly squeezed by inflation, predominantly in the non-retail part of the consumer basket, it’s vital that the next Government helps retailers keep prices low for ordinary shoppers. This means, as well as securing a tariff-free trade deal with the EU, negotiating frictionless customs arrangements, providing certainty for EU colleagues working in the UK, and ensuring the continuity of existing EU legislation as it transfers into UK law.”

Paul Martin, UK head of retail at KPMG, said: “After the surge in retail sales last month retailers have been brought back down to earth with a thump. Like-for-like retail sales contracted in May, which is likely to represent a more accurate depiction of the state of UK retail currently. “With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch. An increased focus on managing costs will dominate the retail agenda.”

Hugh Fletcher, global head of consultancy and innovation, Salmon, commented: “The latest BRC figures offer mixed readings for retailers. E-commerce players face the challenge of continuing to grow and encourage customers to spend. It’s clear that online shopping will be the driving force moving forward, yet vendors cannot afford to sit still in a world that is dominated by technology and a sector that Amazon deservedly owns. BrandZ’s annual brand ranking placed Amazon in the top five, alongside the likes of Google and Apple, with e-commerce firms increasing the value of the retail sector by 14 per cent. The overall value growth of pure online retailers has risen incredibly by 388 per cent since 2006. It’s evident that Amazon leads retail because it understands that the customer always comes first and invests in the right technology that enables its offering to flourish.

“What Amazon has loudly begun to do is grow its offering beyond retail to own the entire customer experience – this feeds into the term Interface Imperialism, where brands diversify and expand their offering into entirely new services. As we shift into an ‘interface-less’ society, retailers will have to transform their offerings to meet shoppers evolving traits.

“Digital assistants and voice interfaces may well be the future of shopping. Amazon, Google and Apple’s development into the area certainly suggests so. As both online and retail sales slow, retailers will have to make new technology-driven ideas the crux of their operation. The reality is that a failure to do so will result in stunted sales and slow or non-existent growth.”