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Sales of home products slowed down in June
Published:  24 July, 2014

The latest Retail Sales Monitor from the BRC and KPMG shows UK retail sales were down 0.8 per cent on a like-for-like basis from June 2013, when they had increased 1.4 per cent on the preceding year. On a total basis, sales were up 0.6 per cent, against a 2.9 per cent rise in June 2013.

Excluding Easter distortions, this is the lowest total growth recorded since May 2011. However, the three-month average is in line with the twelve-month average of 2.5 per cent.

Over the last three months, food showed almost no total growth, at 0.1 per cent, in contrast with the growth of 1.1 per cent experienced over the last twelve months. Non-food reported growth in line with the twelve-month average of 3.7 per cent over the last four months – which irons out Easter distortions.

Online sales of non-food products in the UK grew 10.6 per cent in June versus a year earlier. The non-food online penetration rate was 17.2 per cent in June, 0.9 percentage point higher than in June 2013.

BRC director general Helen Dickinson said: “Consumers continue to benefit from competitive pricing, which may be the cause of softer like-for-like sales in June. For retailers, it’s a bit of a mixed picture, with food sales down and non-food sales up but at a slower rate than in June.

“Are consumers pausing for a breath after the recent rush for revamping their homes?” she asked. “Could it be that they are feeling a touch more confident and have bought into fashion at full price, which in turn has encouraged some retailers to delay their summer sales? In this case, retailers may find that their margins are less affected than figures would suggest.

“On the other hand, the total value of overall food sales is still in decline but the lower pricing policies we have witnessed are good news for consumers who are set to continue to benefit from keen bargains in their shopping baskets.

“The recovery is still on track, however, we are detecting differences in attitudes from customers, perhaps led by the competitive environment for food prices. Consumers are delighted to be saving on their food bills, but are prepared to spend a little bit more on discretionary items.”

And David McCorquodale, head of retail at KPMG, added: “Concern over a potential rise in interest rates is having a dampening effect on retail sales. June saw the brakes applied to spending as shoppers put purchases of big ticket items on hold whilst they waited to see if the Bank of England would take action on interest rates. Even sales of home accessories and furniture flat-lined, which is surprising given the UK is reportedly in the midst of a housing boom.

“Sales in the food sector also struggled, with England’s early exit from the World Cup exacerbating the grocers’ problems. The price war continues to take a heavy toll on the profitability of the sector, which saw sales decline in value again this month.”