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Retail sales reverse
Published:  06 September, 2016

Sales slow in august as the Olympics and outdoor activities divert shoppers’ attentions

According to the latest Retail Sales Monitor from the BRC and KPMG covering the four weeks from July 31to August 27 2016 total sales declined 0.3%, against a 0.1% increase in August 2015. This is the weakest performance since September 2014, excluding Easter distortions. On a three-month basis, Total UK retail sales rose 0.6%, half the rate of the 12-month average of 1.2%.

BRC chief executive Helen Dickinson said: “A month of extraordinary achievement for Team GB certainly produced a feel-good effect and consumer confidence was up on July, but that generally didn’t translate into extra sales. Consumers were enticed towards leisure and outdoor activities rather than shopping, although Food did post its strongest performance in more than two years; fuelled by demand for picnic, barbeque supplies and celebratory drinks.

“Care should be taken in reading too much into August’s lacklustre performance. As we’ve seen in the last couple of months, data portending the health of the economy paint a volatile picture. The fact is that so far little has directly changed for the UK’s consumers as a result of the referendum, so it’s the pre-existing market dynamics that are still driving sales. The slowdown in real wage growth in the first half of 2016 and strong competition will continue to weigh on trend growth in total sales; whilst holiday timings, promotional and seasonal activity will contribute to fluctuations month on month.”

And David McCorquodale, head of retail at KPMG added: “In contrast to July, August’s retail figures illustrate somewhat of a U-turn of retail fortunes. Like-for-like sales were down 0.9 per cent on this time last year - painting a disappointing picture given previous signs of encouragement.

“Sales of women’s fashions performed particularly poorly, despite widespread promotions. The warmer weather made it almost too hot to shop and dissuaded shoppers from looking at the newly arrived autumn products. Despite this, jewellery sales continued to benefit from international shoppers taking advantage of the weaker pound. Whilst for those at home, some of whom may have opted for a staycation given the exchange rate, the warmer weather put wine and barbeques firmly on the menu – much to the delight of food and drinks sellers.

“With the Bank holiday weekend and ‘back to school’ sales largely falling in next month’s figures, it’s unsurprising that children’s fashion and footwear haven’t yet experienced an uplift. Given the volatility of retail sales in the past few months, no doubt retailers will be hoping for a smoother ride in the lead up to Christmas.”