Chamber response to BRC/KPMG retail figures released today

06 Dec 11

The British Retail Consortium and KPMG have branded the retail sales monitor November 2011 as being the worst retail sales growth for six months; and the prospect going into 2012 suggests that retailing is at a crossroads with the downturn in consumer spending and confidence set to continue.

UK retail sales values were 1.6% lower on a like-for-like basis from November 2010, when sales had risen 0.7%. On a total basis, sales were up only 0.7%, against a 2.8% increase in November 2010. On both measures, sales performance was the weakest since May 2011.

Food sales growth was little changed from October's 5-month low. Non-food sales fell further below their year-earlier level, with sales largely promotion-led. Clothing and footwear sales were hit by the mild weather, as well as by underlying uncertainty about jobs and incomes. Consumer caution continued to hit big-ticket homewares and furniture purchases most.

Non-food non-store (internet, mail-order and phone) sales growth fell back in November after picking up in October. Sales were 8.6% up on a year ago, the weakest since March and half the previous November's increase.

Stephen Robertson, Director General, British Retail Consortium, said, "There's a worrying lack of cheer in these figures. The weakest increase in sales for six months suggests consumers are keeping a tight rein on their spending, despite Christmas being so near. This November's mild weather contrasted with much lower temperatures last year, hitting sales of winter clothing and footwear particularly hard. Consumers are not quite in the Christmas mindset yet, although stores are working to generate much-needed sales with high levels of festive discounting. Retailers hope that customers who've managed their finances carefully in recent months will still treat themselves and their families in December, unhampered by the severe weather which disrupted shopping twelve months ago.The Autumn Statement's bleak assessment of the UK recovery is the latest in a sequence of poor economic news which includes falling sales, rising unemployment and stubbornly high inflation. The Chancellor offered some modest assistance but, this close to Christmas, more concrete progress on measures to inspire confidence in consumers and businesses is badly needed."

Helen Dickinson, Head of Retail for KPMG, said, "The latest figures prove once more that the health of UK retailing is deteriorating. Christmas is a crucial trading period for the UK retail sector but this year many retailers will be nervous and unsure as to how the season will pan out. Cash-strapped consumers continue to be reticent and last week's gloomy economic forecast by the Chancellor won't help to boost confidence levels. Any sales are hard won, with high discount and promotion levels. Retailers' performance is suffering because of weak top-line growth and declining margins, making the backdrop even more challenging. December will require some tough decisions for a number of retailers as they struggle to plot a path in such challenging conditions."

Ian Welland, Head of Area Development for Hampshire Chamber of Commerce said, "“The disappointment of the retail figures is a direct reflection on consumer spending being pulled in following a reduction in disposable income. Whilst there remains insecurity in the job market and the cost of living continues to rise, it is doubtful that there will be a definitive shift in retail figures for the foreseeable future. What is apparent is that UK consumers are still spending at the value end but less on household or luxury items which seems to be the trend locally. And there is still a loss of business on the high street to the internet but most retailers now have a better web presence and are offering their customers better value.

“Locally however, some of our towns and cities are showing a marginally different retail picture. In Winchester, trade appears to be bucking the trend although there are some shops where this is not quite the case and in our regional shopping centres of Southampton, Portsmouth and Basingstoke, consistent footfall suggests there is an improving retail position. The mildness in weather compared to this time last year may have something to do with this trend. In our smaller towns such as Andover, Fleet, Havant and Alton, retail appears to be suffering more so and this is a concern that will need to be addressed as our region develops core strategies and puts into effect plans for growth.”

Please see links below for BRC's reports and access to previous monitor reports.

Useful links

http://www.brc.org.uk/brc_show_document.asp?id=4314&moid=7593

http://www.brc.org.uk/bis/default.asp?main_id=3