Snow distorts February sales

9 March 2010

• UK retail sales values rose 2.2% on a like-for-like basis from February 2009, when sales had dropped 1.8%, hit by snow and consumer caution. On a total basis, sales rose 4.5% against only 0.1% growth in February 2009.

• Food sales slowed further after shoppers had stocked up during January's snow. Lower food inflation and consumer caution also depressed sales. Non-food recovered, having been hit by January's snow, but growth was often against larger declines a year ago. Clothing and footwear showed stronger gains than in January and homewares and furniture returned to growth.

• Non-food non-store sales (internet, mail-order and phone sales) in February were 15.5% higher than a year ago compared with 14.6% in January. The very cold and wet weather, and shoppers receiving catalogues whose delivery had been delayed by snow, helped to boost sales.

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

"Despite appearances, these results are not that strong.

"The growth is compared with very weak figures a year ago when February saw the worst of last winter's weather and this February's performance was helped by sales postponed from January – particularly sales of non-food items such as homewares and fashion.

"Consumer confidence is certainly up on this time last year but, with unemployment rising again, spending plans are falling. When the weather-related distortions are stripped away, it's clear customers are still cautious."

Helen Dickinson, Head of Retail, KPMG, said:

"Another month of mixed performances. Slowing food inflation hindered growth in value terms, while the expected uplift on a weak snowbound February 2009 duly arrived and the first week of the month saw double digit growth in most non-food sectors. As the month progressed, clothing and footwear, led by men's and children's, as well as home accessories and textiles, continued to perform well, as they had done in January. However, other non-food sectors were not so fortunate, highlighting the difficulties in enticing discretionary spending given the political and economic uncertainties ahead. The consumer remains cautious and confidence fragile."

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

"In February grocery retailers set out highly competitive promotions focused, above all, on Valentine's Day. However, falling levels of inflation contributed towards slower growth in food and drink sales values over the month, with volumes remaining robust.

"IGD consumer research suggests that in-store promotions can be more effective with shoppers than television or magazine advertising. More than a third, 37%, of shoppers say that promotions in supermarkets tempt them to try a new product, compared with 29% for advertising.”

Non-Food Non-Store* - Sharon Hardiman, Head of Non-Store Retailing, BRC, said:

"This is good growth. Slightly up on January and up on February a year ago. Some of it was a catch-up on sales held over from the previous month, particularly where catalogues were late reaching customers. Promotions and clearances helped but also the range of goods and retailers available online is still expanding and customers are steadily becoming more comfortable with this way of shopping.

"Non-store retailing is only a small corner of overall retailing, taking just over a twentieth of total spending. The internet is not immune from the current uncertainty but the negative effects are outweighed by its continuing march forward."

Non-Food Non-Store Sales: % change year-on-year

Commentary

Non-food non-store sales (internet, mail-order and phone sales) in February were 15.5% higher than a year ago compared with 14.6% in January. The very cold and wet weather made shopping from home more attractive. Shoppers receiving catalogues whose delivery had been delayed by snow also boosted sales, with purchases shifted from January to February. Some extended clearance sales, special offers and promotions helped, though often at the expense of margins.

Sales continued to outpace store sales but the expansion is from a very low base, as non-food non-store sales account for only about 6% of total retail sales.

Clothing and footwear benefited from the cold wet weather. Homewares and furniture also picked up, having been put off in January when people concentrated on essentials during the adverse weather.

*Non-Food Non-Store sales are transactions which take place over the internet, or via mail order or phone.

Food & Drink

Food sales growth fell further to show its smallest gain since July 2007. Lower food inflation, less need to buy after stocking up in January's snow and a return to more cautious spending after Christmas all contributed to the slowdown. Having treated themselves at Christmas, some shoppers were now returning to value ranges and seeking out good deals and promotions. The cold wet weather helped winter comfort foods. Valentine's Day gave gains for some, notably in confectionery, while others noted more careful spending.

Clothing

Sales recovered strongly as people got out to the shops after the snow. Pent-up demand from the very cold, wet weather gave strong gains for men's, women's and childrenswear, though against sharp falls a year ago when trade was hit by snow. Winter coats, jackets, fleeces and knitwear sold well, particularly in clearance sales, though often at the expense of margins. Warm accessories were popular, with scarves helped by fashion trends. Spring/summer ranges generally had a slow start in the cold weather, though for some, newness and colour generated interest. Valentine's Day gave its usual boost to jewellery and fashion accessories.

Footwear

Overall sales growth was similar to January's, showing a good gain but against a small decline a year ago. Men's and children's footwear were slightly stronger than women's. The cold wet weather, with snow in some areas, drove boots – high-leg, ankle boots and Wellingtons – although often at clearance discounts. Shoe-boots were popular, helped by fashion trends. Spring/summer ranges had a slow start in the cold weather.

Electrical and Electronic

It was a difficult month for most, as people cut back after spending at Christmas and in clearance sales. Strong competition meant shoppers actively sought out good deals. White goods held up, though were driven largely by replacement purchases, but sound and vision and computers were mixed as people concentrated on essentials. Consumer caution hit larger items while smaller appliances did better, especially the more practical kitchen and cleaning products. Larger TVs held up for some, but smaller ones were slower and often deal-driven. Digital imaging was also weaker. Computers were mixed, amid strong competition, for laptops, netbooks and notepads. Printers and peripherals continued to outperform computers. Heating benefited from the freezing weather.

Department Stores
For most, February was a better month than January, as shoppers returned after the snow and pent-up demand boosted sales. However, gains in the first half of the month were flattered by soft comparatives from the snow a year earlier. Clothing and footwear benefited from the cold wet weather but homewares were mixed both across stores and sectors.

DIY/Gardening

The coldest February since 1991 hit both DIY and gardening hard. Gardening was also hit by very wet weather, as well as more snow in some areas. Hence spring ranges had a very slow start. Decorating and outdoor DIY suffered, as did trade building, with many projects put off until more clement weather.

Homewares

Both home accessories and house textiles picked up to show good gains, but the growth was against sizeable declines a year ago and followed a weak snow-hit January. Some noted good sales of duvets and bedding during the cold weather, but for most there was a return to underlying caution and concentration on essentials. Hence practical kitchen and cooking products often took priority over discretionary and decorative extras. Spring cleaning promotions helped hardware and cleaning products.

Furniture and Floorcoverings

Sales picked up to show modest growth but this was against a larger decline in February 2009. It also followed a sharp drop this January when non-essential purchases had been put off in the snow. Deliveries of orders placed in clearance sales also helped to boost growth for many. Fitted kitchens and bathrooms showed gains for some. Beds and dining furniture were the brighter spots, benefiting from promotions and new ranges.

Health and Beauty

Toiletries and cosmetics growth edged up but the improvement was against a larger decline a year ago. Valentine's trade was mixed, often promotion-driven, and disappointing for some, especially in fragrances. Cosmetics were helped by new launches and winter skincare held up in the cold weather. Cough/cold remedies slowed, owing to low incidence.

Leisure Goods

Book sales remained down on a year ago, amid strong competition between supermarkets and specialists. Non-fiction bestsellers struggled, with fewer top titles this year. Toys continued to do well but computer and electronic games were difficult. Arts and crafts were popular, amid widespread competition, especially at lower price points.

3-Month Averages

The three-month weighted average is calculated by using the monthly weighted results for both food and non-food categories, and applying a weighting to the result to take into account the 4-4-5 week trading pattern for the months covered.

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