Retail sales saw the slowest level of growth since April 2017, according to the Office for National Statistics (ONS).
The ONS found that sales volumes in January increased by just 0.1 per cent.
However, compared with January 2017, the quantity bought increased by 1.6 per cent. Although this was a slowdown on the year-on-year growth seen against the increase of 2.4 per cent in January last year.
The main contribution to the year-on-year growth came from non-food stores, at 2.6 per cent.
For every £1 spent in the retail industry, 42 pence was spent in non-food stores, according to ONS.
Non-food stores were the only sector to show an increase in contributions to the overall growth for the quantity bought (0.4 per cent) and amount spent (0.5 per cent), when compared with December 2017.
However, the amount spent remained flat on the month as growth in non-food store offset declines in food and non-store retailing.
Online sales continued its trend of underlying growth but at a much slower rate than previously seen.
Total online retailing saw a year-on-year increase of 9.1 per cent, compared with 19.2 per cent in January 2017. Of this, non-food stores reported the largest growth of 12.8 per cent.
Average weekly spending online fell in January to £1.17 billion, compared with the £1.2bn seen in December 2017.
Rhian Murphy, ONS senior statistician, said: “Retail sales growth was broadly flat at the beginning of the New Year, with the longer-term picture showing a continued slowdown in the sector. This can partly be attributed to a background of generally rising prices.”
Rachel Lund, head of retail insight and analytics at the British Retail Consortium (BRC) said: “These figures represent what is likely to become the norm over the coming year. Growth in both the quantity and value of goods held steady in January on previous months, but at very low levels by historical standards.
“The fact is that consumers’ incomes simply aren’t increasing fast enough to support levels of sales growth that we’d become used to. Last year, households were able to dip into reserves to support purchasing levels, despite the pressures on household incomes. However with household saving rates reaching new lows, that is no longer an option, so we’re likely to see sales move much more closely in line with earnings.
“All of this signals another challenging year for retailers. With greater competition for households’ increasingly precious discretionary spending, retailers will have to be savvier than ever in offering great products and great value to consumers.”
At Data analyst SAS, UK and Ireland head of retail centre of excellence Andrew Fowkes commented: “The results are a signal to UK retailers that their understanding of customers is slipping away. They don’t lack knowledge – in fact, they have deep wells of customer data to draw from. What’s missing is the ability to make better sense of it, and use it to guide and improve the customer experience.
“Consumers are very different today than they were before the financial crisis. Far from being passive, they have become proactive and conscious of the power they hold in the marketplace. A new ‘data generation’ are happy to barter their personal data for better services, but expect a seamless, personalised experience in exchange. They want retailers to know who they are, regardless of the channel they use, so that they get the most relevant services fast.
“To achieve this, retailers need advanced analytics to capitalise on the mountains of data they’ve accumulated. For years, they’ve collected customer information through loyalty schemes, e-mail marketing promotions and tills, as well as online behaviour. However, only 17 per cent can use this data to provide a targeted, real-time customer experience. If that trend continues, retailers risk losing both their relevance and their customers.
“By analysing all of customer feedback in a joined-up way – from complaints to social media activity – companies can determine what products and services work well and what needs to change. As they extract more insights on spending habits and trends, they will begin to be able to treat customers as individuals, not members of broad segments.
“In a time of uncertainty, retailers need to break through the malaise and recapture consumers with timely, relevant and personalised services.”