SALES VALUES FALL FOR FIRST TIME IN TWO YEARS

15 April 2008

UK retail sales fell 1.6% on a like-for-like basis, compared with March 2007, when sales were up 3.9%. The decline was the worst since July 2005 when cold wet weather hit sales.

The earlier Easter, together with extremely unseasonal weather and school holidays spread across several weeks, make comparisons difficult. The additional spending for Easter being in March this year but in April last year would normally be expected to result in a year-on-year increase in sales.

Food sales slowed after two strong months and clothing and footwear were the worst for at least 8 years. Homewares and furniture fell further, despite continued discounting and promotions.

Consumer confidence has fallen further to new lows. With increasing demands on household budgets, shoppers are very price-conscious and reluctant to spend on big-ticket items. Heavy discounting was still needed to tempt customers to buy.
 
Stephen Robertson, Director General, British Retail Consortium, said:

“This is the first year-on-year fall in like-for-like sales for two years and the worst result for nearly three years. Here is the strongest evidence yet that customers are making serious economies and are increasingly concerned about the future. With recent retail profit warnings, it is further proof that trading is extremely tough but retailers are fighting back by keeping prices low and delivering extra value.

“Hard-up customers and dreadful Easter weather conspired to dampen demand for DIY and gardening retailers and those selling clothing, footwear and big-ticket items such as domestic appliances and furniture but almost every sector except food saw sales down on a year ago. It’s clear customers are concentrating on essentials.”

Helen Dickinson, Head of Retail, KPMG, said:

"Given the timing of Easter, one thing we expected was this month's figures to be strong. Instead, we have the worst monthly performance since July 2005.  Retailers were hit by the double whammy of an early Easter and poor weather even before factoring in the slowdown in consumer spending on the back of rising inflation, falling house prices and the impact on consumer confidence of the credit crisis.  The week leading up to Easter Saturday bode well but the performance in the remaining two weeks of the month was not sufficient to hold up the month's results.  All sectors, with the exception of food and homewares, which had nothing to write home about, delivered negative like-for-like sales across the month.  Consumer confidence remains on a knife-edge."

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

“Annual comparisons are hard to read this month owing to the phasing of Easter as the figures cover different holiday weeks from the equivalent period in 2007. However wintry weather will have dampened appetites for arriving summer lines. Therefore grocery retailers will need to redouble their efforts to win custom through a compelling package of range, promotions and price.

“A critical period lies ahead which will show how effective retailers have been in satisfying the needs of customers increasingly intent on hunting out value from a competitive marketplace.”