Non-food retail sales in the UK have dropped by 1.1% on a like-for-like basis in the three months to 24 February, compared with the same period in 2017.
According to the latest British Retail Consortium BRC–KPMG monitor, non-food retail sales in the UK fell 0.5% on a total basis, below a 12-month average drop of 0%.
Non-food retail sales in physical stores across the UK declined by 3.3% on a like-for-like basis in the three-month timeframe, falling by 2.4% on a total basis. The average decline during the year totalled 2.2%.
Online sales of non-food products grew 6.4% in the four weeks to 24 February, against growth of 8% in the same month in 2017. This ranked below the three-month and 12-month averages of 6.5% and 7.7% respectively.
However, the online penetration rate climbed from 20.5% in February 2017 to 21.1% in February 2018.
During February, total UK retail sales across food and non-food increased by 0.6% on a like-for-like basis from February 2017, against a 0.4% decline in the preceding year.
On a total basis, combined food and non-food sales rose 1.6% in the four-week timeframe, against growth of 0.4% in February 2017. This is roughly in line with a three-month average of 1.5% and 12-month average of 1.7%.
Helen Dickinson, chief executive of the British Retail Consortium, said: “The headwinds to retail spending continued to blow strong in February. Inflation is still eating into shoppers’ budgets, pushing them to spend a greater share of their income on essentials and leaving less left over to buy discretionary, predominantly non-food, retail items. At the same time, weak growth in household earnings is keeping overall sales low.
“There’s little sign that consumer confidence, rather than financial reality, has much to do with the current weakness in spending. Furniture, often considered the bell weather of consumer confidence, actually saw sales improve in February as shoppers took advantage of credit facilities offered by retailers. The fact is that consumers want to spend, they just don’t have the resources to do so.
“With the upward pressure on prices from the fall in the pound now starting to subside we expect to see some loosening of the squeeze on spending on non-essentials, but it’s likely to come slowly, [as] are anticipated increases in wage growth.”
Paul Martin, head of retail at KPMG, added: “Retailers experiencing any growth in this environment will be counting themselves lucky. Indeed, total growth of 1.6% in February is quite an achievement in such testing times. Softening consumer demand, rising costs for retailers and of course the ongoing structural changes within the industry, are creating the perfect storm which is uprooting the weakest players.
“Online retail appeared to have fared better – with growth across all categories – but the latest figures reinforce an underlying trend of a slow-down in growth online, which prompts concern.
“The retail shakeout will gather further momentum in the coming months, and retailers with large physical store estates are particularly under pressure. Moreover, the cost of one of the coldest winters on record has yet to be factored in. It’s not all doom and gloom though, a number of retailers are bucking the overall trend by focussing on a differentiated proposition whilst remaining relevant to the customer.”