Sixth month of poor sales growth

12 October 2010

•UK retail sales values were up 0.5% on a like-for-like basis from September 2009, when sales had risen 2.8%. On a total basis, sales were up 2.2% against a 4.9% increase in September 2009.

•Food sales growth picked up a little. Clothing slowed but footwear sales improved, helped by cold wet weather and new autumn/winter ranges. Furniture and floorcoverings was the only sector where sales were actually down on a year ago. Larger purchases in particular were affected by consumer uncertainty over job cuts and income prospects.

•Non-food non-store sales (internet, mail-order and phone sales) strengthened further in September and were 19.1% higher than a year ago, the best since May, but amid increased promotional activity.

Stephen Robertson, Director General, British Retail Consortium, said:

"Sales growth continues to be poor. We've now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future.

"What growth there was largely came from food with the performance helped by food inflation.

"Overall, non-food sales were down on a year ago for the first time since mid 2009. With VAT higher than it was last year, and pushing up sales values, it's an even worse performance than it looks. There is little evidence yet of major purchases being brought forward from 2011 to beat the coming VAT increase

"Despite widespread discounting, sales of major items had the toughest time. It's clear people are cautious and major spending is largely on hold."

Helen Dickinson, Head of Retail, KPMG, said:

"The value of food sales crept up slightly as the impact of inflationary pressures continued to filter through. Nonfood sales as a whole remained sluggish overall with like-for-like sales dipping into negative territory in September. But this is with significant variation in performance across individual sectors – footwear maintained the top spot in growth terms while furniture and floorcoverings was firmly entrenched once again as the worst performing sector, mirroring the recent news of house price falls. We hold our breath as to whether the upcoming Public Spending Review will derail current retail spending further – confidence is fragile."

Food & Drink – Joanne Denney-Finch, Chief Executive, IGD, said:

"Food and drink sales continued to grow through August, but it was a modest month. Intense promotional activity is allowing shoppers to mitigate the effects of food inflation.

"Looking ahead, IGD ShopperTrack research shows that a quarter of shoppers will be more focused on saving money in the next 12 months, with nine in ten consumers expecting prices to go up.

"Now Christmas is just around the corner, many retailers already have seasonal aisles in place and are starting to advertise gifts and festive fare. The industry will be hoping for Hallowe’en to boost sales in October as the countdown to the critical festive period begins in earnest."

Non-Food Non-Store - Stephen Robertson, Director General, British Retail Consortium, said:

"Six per cent of all non-food goods are sold through online, mail-order and phone. But this corner of non-food retailing performed dramatically better than its store-based equivalent. Strong growth of 19 per cent shows that retailers are continuing to develop this retail channel as a major route to driving sales. Discounts and promotions were a big factor in persuading customers to buy but it’s clear that customers are increasingly embracing the internet as a mainstream part of their shopping routine."

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