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Retail sales slow as consumer confidence ‘deteriorates’

Non-food retailer sales in the UK declined by 0.4% on a like-for-like basis during the three months to February – the first three-month decline since November 2011.

The disappointing performance of non-food was offset to some extent by food sales, which increased by 0.6% year on year during the same period, the British Retail Consortium (BRC) and KPMG Retail Sales Monitor shows.

However, Paul Martin, UK head of retail at KPMG, said it was ”clear that consumer confidence is showing signs of deteriorating”.

Overall, like-for-like retail sales crept up 0.1% during the three months.

Online sales of non-food products grew 7.7% while in-store sales declined 2.4% on a total basis and 2.6% on a like-for-like basis.

BRC chief executive Helen Dickinson said: “Overall growth was subdued in February driven by a continuation of the slowdown in non-food sales. This was marginally offset by slightly stronger growth in food sales.

“There was some negative distortion created by the later timing of Mother’s Day this year, which meant that some categories, notably women’s accessories and health and beauty, didn’t benefit from the build-up of gift purchases as they did last year. But looking beyond this distortion, the persistent weak sales performance of several non-food categories points to an undeniable trend of cautious spending on non-essential items.

“Tougher times are expected ahead. The impact of inflation on consumer spending will add further intensity to an already fiercely competitive environment in which the ability to adapt and innovate will be key to survival. Looking to the Budget this week, we hope to see a commitment from Government to lay a path to a truly sustainable business rates system that will give retailers the flexibility needed to invest and support their local communities.”

Martin added: “Evidently February was yet another challenging month for the majority of retailers. With inflation starting to have an impact on retail performance, it is clear that consumer confidence is showing signs of deteriorating.

“School half-term holidays are likely to have contributed to the stronger performance in children’s toy sales during the month. Likewise, furniture and home textile sales will have benefited from parents using the holiday as an opportunity to spruce up the home.

“Retailers will be paying close attention to the upcoming spring Budget in the hope of seeing some measures to ease the pressure being placed on margins. For some bricks-and-mortar retailers, a hike in business rates may well be the straw that breaks the camel’s back.”

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