UK retail sales fall again, but fashion and e-tail are more buoyant
Can the news get any worse for UK retail? Probably yes, but it may feel like it's at rock bottom at the moment with news on Wednesday that UK retail sales fell at their highest rate in 22 years last month.
The 3.1% year-on-year fall was the biggest drop since the British Retail Consortium (BRC) and KPMG Survey launched in 1995.
Spending on non-food items was particularly weak and that's in spite of what looked like a minor fashion sector revival (more of that later).
Basically, the BRC said that overall sales “fell off a cliff” in April after having risen during March. That's a damning assessment, but it has to be pointed out that the ever-changing dates of Easter had a big effect. Easter fell in March this year so April lacked a major event that could have boosted sales.
On a comparable basis, sales fell by as much as 4.2%, which again, was a historically bad performance (the previous worst news came in April 2005). On a comps basis, last year’s April sales had been up 5.6% – but let’s not forget the Easter issue, because those sales last year got a hefty boost from Easter falling during the month.
But one piece of good news was that clothing and footwear sales actually managed to rise, although only slightly and we weren't given a specific figure. That was thought to be the result of the sunny weather during April as pent-up demand – and presumably, the large number of discounts that were available – saw shoppers updating their wardrobes.
And online shopping was particularly strong last month too. It rose 22%, which was surprising given that the rise in April 2017 was smaller at 20.8%. Given that clothing, footwear and accessories all add up to a key category online, we have to assume that the e-sales increase this time also benefitted the fashion sector.
But back with the bad news, the BRC warned of a weak underlying trend. Chief executive Helen Dickinson said: “Even once we take account of these seasonal distortions, the underlying trend in sales growth is heading downwards.
“The first glimpse of summer may have temporarily lifted clothing and footwear, but non-food sales overall continue to be weak. Consumers’ discretionary spending power remains under pressure and the reality is, that with only a gradual return to solid growth in real incomes expected, the market environment is likely to remain extremely challenging for most retailers.”
Meanwhile data from Barclaycard’s regular monthly survey showed consumer spending rising by 3.4% year-on-year in April, which was better than the 2% increase during March. That said, the 3.4% rise was the second weakest in a five-month period and with inflation taken into account, was certainly not very impressive.
Barclaycard said UK consumers are still budgeting carefully and are concerned that interest rate rises could be on the horizon so are cutting back on non-essentials.
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