Brexit uncertainty impacts retail sales

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Consumers throughout February were reluctant to shop following concerns and uncertainty around Brexit, leading to a decline in growth.

Consumers throughout February were reluctant to shop following concerns and uncertainty around Brexit, leading to a decline in growth, said the British Retail Consortium.  

This is most likely to mean that recyclers will see a decrease in the amount of material available for recycling. 

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On a total basis, sales increased by 0.5% in February, against an increase of 1.6% in February 2018. This was below the 3-month and 12-month averages of 0.9% and 1.2%, respectively. 

UK retail sales decreased by 0.1% on a like-for-like basis from February 2018, when they had increased by 0.6% from the previous year.  

Over the three months to February, in-store sales of non-food items fell by 2.8% on a total basis, and 3.1% on a like-for-like basis. This is under the 12-month total average decline of 2.4%. 

During the same three months, food sales increased by 1.3% on a like-for-like basis and 2.4% on a total basis. This is below the 12-month total average growth of 2.9% and is the lowest since August 2017.  

However, within the same period, non-food retail sales decreased by 0.6% on a like-for-like basis and 0.4% on a total basis. This is below the 12-month total average decrease of 0.2%.  

Online sales of non-food items grew by 5.4% in February, against an increase of 6.4% in February 2018. This pulls down the 12-month average to 6.9% and is also below the 3-month average of 5.6%. 

The online penetration rate rose from 27.5% in February 2018 to 29.6% in February. 

British Retail Consortium chief executive Helen Dickinson said: “Uncertainty surrounding the UK’s imminent exit from the European Union has hit consumer spending. While real incomes have started to rise over the past year, shoppers have been reluctant to spend this February, holding back growth. This slowdown was not limited to physical stores, with growth in online non-food sales well below the twelve-month average. 

“With consumers increasingly aware of the risk of a no deal Brexit, it is likely that uncertainty has driven this cautious approach to retail spending. If government wishes to reassure both the public and businesses, they should ensure a chaotic no deal – which would lead to higher costs, higher prices, and less choice for consumers – is taken off the table with immediate effect.” 

KPMG UK head of retail Paul Martin said: “Following a modest recovery in January, February saw a slowdown in sales. While consumer spending has so far remained relatively resilient, driven by factors such as low unemployment and wage growth, it would seem that continuing political and economic uncertainties are beginning to notably affect shoppers’ spending habits. 

“Across all categories there was sluggish growth, and the milder weather appears to have shifted the focus away from indoors with furniture sales declining – and not even Valentine’s Day could boost sales in the stationery category. 

“However, the full impact of the recent unseasonably warm weather is yet to be seen, especially for the clothing categories, and online sales growth remained steady. Non-food continues to be under more pressure than grocery, with shoppers focusing on the essentials. To manage these dynamics, retailers have to continue managing cost and margin and carefully assess how to gain market share in a broadly flat market.” 

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