For recyclers looking where retail quality supply of material will come from, the answer is the grocers.
Food retailers had a good month in February, while discretionary spend on non-food items struggled.
According to the British Retail Consortium (BRC)/KPMG Retail Sales Monitor for February, UK retail sales increased by 0.6% on a like-for-like basis from February 2017, when they had decreased 0.4% from the preceding year.
On a total basis, sales rose 1.6% in February against a growth of 0.4% in February 2017. This is pretty much in line with the 3-month and 12-month average of 1.5% and 1.7% respectively.
Over the three months to February, in-store sales of non-food items declined 2.4% on a total basis and 3.3% on a like-for-like basis. On a 12-month basis, the the total decline was 2.2%.
During the same period, food sales increased by 2.8% on a like-for-like basis and 4.0% on a total basis. This is now in line with the 12-month average growth of 3.9%, which is the highest since October 2012.
Over the three months to February, non-food retails sales in the UK decreased by 1.1% on a like-for-like basis and 0.5% on a total basis. This is below the 12-month average of 0.0%.
Online sales of non-food products grew by 6.4% in February, against a growth of 8.0% in February 2017. This is below the 3-month and 12-month averages of 6.5% and 7.7% respectively.
BRC chief executive Helen Dickinson said:
“The headwinds to retail spending continued to blow strong in February. Inflation is still eating into shoppers’ budgets, pushing them to spend a greater share of their income on essentials and leaving less left over to buy discretionary, predominantly non-food, retail items. At the same time, weak growth in household earnings is keeping overall sales low.
“There’s little sign that consumer confidence, rather than financial reality, has much to do with the current weakness in spending. Furniture, often considered the bellwether of consumer confidence, actually saw sales improve in February as shoppers took advantage of credit facilities offered by retailers. The fact is that consumers want to spend, they just don’t have the resources to do so.
“With the upward pressure on prices from the fall in the pound now starting to subside we expect to see some loosening of the squeeze on spending on non-essentials, but it’s likely to come slowly. And so are anticipated increases in wage growth. Crucial for consumers and retailers over the coming months will be a successful outcome to trade negotiations, ensuring that amidst the current difficulties, they won’t be facing further increases in costs from new tariffs on the everyday goods we import from the EU.”
KPMG head of retail Paul Martin added: “Retailers experiencing any growth in this environment will be counting themselves lucky. Indeed, total growth of 1.6% in February is quite an achievement in such testing times. Softening consumer demand, rising costs for retailers and of course the ongoing structural changes within the industry, are creating the perfect storm which is uprooting the weakest players.
“On the high street, it was grocery sales that continued to pull it out of the bag. Meanwhile, Shrove Tuesday may have resulted in an uptick in cooking accessory sales, but performance in non-food in general was once again disappointing.
“Online retail appeared to have fared better – with growth across all categories – but the latest figures reinforce an underlying trend of a slow-down in growth online, which prompts concern.
“The retail shakeout will gather further momentum in the coming months, and retailers with large physical store estates are particularly under pressure. Moreover, the cost of one of the coldest winters on record has yet to be factored in. It’s not all doom and gloom though, a number of retailers are bucking the overall trend by focussing on a differentiated proposition while remaining relevant to the customer.”