The British Retail Consortium (BRC) and KPMG have released the retail sales monitor for January 2018, covering the four weeks from December 31 2017 to January 27 2018.
In January, UK retail sales increased by 0.6% on a like-for-like basis from January 2017, when they had decreased 0.6% from the preceding year.
On a total basis, sales rose 1.4% in January, against a growth of 0.1% in January 2017. This is roughly in line with the 3-month and 12-month averages of 1.5% and 1.6% respectively.
Over the three months to January, In-store sales of Non-Food items declined 2.9% on a Total basis and 3.6% on a Like-for-like basis. On a 12-month basis, the total decline was 2.3%.
Online sales of Non-Food products grew 5.3% in January, against a growth of 8.0% in January 2017. This is below the 3-month and 12-month averages of 6.6% and 7.8% respectively. Online penetration rate increased from 21.9% in January 2017 to 22.2% in January 2018.
BRC chief executive Helen Dickinson OBE commented: “The persisting tough trading environment played out at the start of the year with a mixed set of trading updates and subsequent announcements. Sales as well as profits are seemingly harder to come by. Against this challenging back-drop, 2018 didn’t have a bad start during what is traditionally a lean month, with sales creeping up in-line with the year’s average.
“The figures paint the same old picture of divided fortunes for food and non-food sales. Rising food prices continued to inflate sales growth and absorb the lion’s share of shoppers’ squeezed budgets, while sales of non-food items struggled in January, dragging the 12-month average into negative territory for the first time in nine years.
“Overall, the going remains bumpy as consumers are still seeing wages fall in real terms. Although inflation will ease a bit this year these pressures will remain. So to ensure no more pain is added to household budgets, we want to see our Brexit negotiators focus on delivering the terms of the transition to provide businesses and consumers with some much needed certainty.”
KPMG head of retail Paul Martin added: “January typically presents retailers with a tough gig persuading shoppers to spend in what is a cash-strapped month for most. With that in mind, 1.4% growth – or 0.6% on a like-for-like basis – has to be seen as a success, albeit food sales continue to be the driver of this growth.
“There was little growth in most categories besides food. Bigger ticket items such as furniture traditionally rely on strong post-Christmas trade, but this year seem to have struggled to woo consumers with the lure of a sale sign in the window. Online sales fared better, with bargain hunters most interested in fashion and tech.
“With Christmas reporting now behind us, the true financial health of the industry comes into focus. For many retailers, online sales have taken the sting out of the challenging trading environment. It’s therefore not surprising to see many retailers rethink their physical presence. Ensuring you can deliver a customer-centric and channel agnostic proposition will increasingly split the winners from the losers in 2018.”
Salmon global head of consultancy and innovation Hugh Fletcher was among those to comment on the figures.
“Whilst sales overall increased marginally, online came out as the clear winner, with online penetration rate increasing to 22.2% in January,” he said. “We are now seeing the fruits of investment in online operations of retailers and brands now coming to the fore, leaving the digital laggards nowhere to hide.
“Brands need to look at the lessons they can learn from those that are demonstrating strong online channels, and how they too can create a stronger online presence that offers an engaging experience for prospective customers – we are even seeing some experiment with innovative services such as voice ordering! It is this forward thinking that will help to capture the hearts of customers and grow that loyalty base which is vital in today’s retail market.
“Retailers need to keep pace with consumers and provide the technological innovation that they expect and crave. We recently found 57% of consumers believe their technology capabilities are in fact more sophisticated than those which retailers currently offer. By providing customers with the services that they desire, they will see success this year as online channels become an even more prominent player in the retail landscape.”