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Brexit uncertainty hits retail sales

Retail sales in the UK increased by 0.4% in February, compared with January, the Office for National Statistics (ONS) has reported today.

Non-food stores were the largest contributor towards the increase seen in February, for the quantity bought and amount spent, both at 0.4%. 

Year-on-year growth in the quantity of retail sales in February increased by 4%. 

Online sales fell to 17.6%, compared with 18.8% reported in January. This was a year-on-year increase of 9.4%, when compared to February 2018.

Online sales in department stores grew 1.1% year on year, but fell 22.8% in February when compared to the previous month. 

Meanwhile, online sales in textile, clothing and footwear stores were up 6.4% year on year, while month on month growth declined 22.5% in February. 

Commenting on today’s retail sales figures, ONS head of retail sales Rhian Murphy said: “Retail sales continued to bounce back in the three months to February with strong increases in fuel sales and online shopping.”

Responding to the latest ONS retail sales figures, Rachel Lund, head of insight and analytics at the British Retail Consortium, said: ”Retail sales were fairly sluggish in February. Food sales growth was particularly hard hit, in part due to consumers buying extra provisions in February 2018 before the arrival of the ‘Beast from the East’. Non-food sales were more robust, offering some relief for those retailers.

“With business rates due to rise once again on 1 April, retailers will see their already tight margins squeezed further. Unless government takes action to reform the broken business-rates system we may see a repeat of 2018, where many household names disappeared from our high streets.” 

Ian Gilmartin, head of retail and wholesale at Barclays bank, said: “It’s another fairly strong set of numbers from the ONS this morning, with good year-on-year growth across most of the retail industry. That yearly comparison is flattered slightly as the last couple of days in the February 2018 reporting period were hit by the ‘Beast from the East’, in contrast to the mild February we’ve enjoyed this time around, but the underlying story in these figures is positive, with retailers somehow finding a way to keep us spending.

“The online picture is interesting, with the proportion of sales dipping on a monthly basis for the third time in a row. It’s certainly too early to spot any trend here but will be worth keeping an eye on future results to see whether the extraordinary growth we’ve seen in online is beginning to level out.

“There’s still only one issue at the front of retailers’ minds at the moment, and as the BRC have said, until the industry gets more clarity around Brexit and the consequences for their supply chains, it’s difficult to plan effectively for the rest of 2019.”

Lee Lucas, principal and CEO at the Fashion Retail Academy, also commented: “An unseasonably warm February brought consumers out of hibernation, contributing to an unexpected rise in retail sales at the start of the year.

“Good weather and a fear of rising costs after Brexit will have undoubtedly helped this uplift in sales, but there’s more behind these figures than just the first blushes of Spring.

“Retailers are increasingly honing their craft, luring customers to the high street with competitive pricing and blended shopping environments that marry the convenience of online shopping with the tangible experience of heading to a store.”

 

 

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