UK retailers enjoy strong start to New Year, BRC-KPMG Retail Sales Monitor reveals

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UK retail sales rose by 2.6% on a like-for-like basis from January 2015, when they had increased 0.2% from the preceding year, according to the latest BRC-KPMG Retail Sales Monitor. On a total basis, sales were up 3.3%, against a 1.6% rise in January 2015. This is the best growth since September, firmly ahead of the three-month average of 1.6% and the 12-month average of 1.9%.

Adjusted for the BRC-Nielsen Shop Price Index deflation, total growth was 5.1%.

All product categories contributed to the growth, apart from Food, which turned slightly negative but the 3-month and 12-month averages for Food stayed unchanged from last month. Furniture topped the growth rankings table, a particularly strong achievement in the most important month of the year for the category.

Online sales of Non-Food products grew 14.9% in January versus a year earlier, when they had grown 11.7%. The Non-Food online penetration rate was 21.5%, up 1.4 percentage points from January 2015.

Helen Dickinson, chief executive, British Retail Consortium, said: “Following on from a somewhat disappointing Christmas period for retailers, the new year kicked off to a strong start, with 3.3 per cent growth across all product categories and 2.6 per cent growth on like-for-like sales. This was the best performance for retailers since September and ahead of the three and twelve month averages.

“January’s performance was driven by big-ticket items, in particular furniture, which is encouraging in the largest month of the year for the category. However, the performance in clothing and footwear was driven by the New Year sales. After seeing a slight recovery in December, food sales were once again slightly down in January, while the mildly positive longer term trends were unchanged.

“Retailers will welcome the positive start to what will be a momentous year for the industry. Next month the Treasury will report back on its long awaited review of the business rates system. This is the moment for the government to rebalance this tax away from property intensive industries in order to ensure that the introduction of the living wage does not have unintended consequences on our local communities and jobs .”

David McCorquodale, UK head of retail, KPMG, said: “Fashion and the home drove retail sales to beat the January blues, up 2.6 per cent in the month on a like-for-like basis. After a slow start to the Autumn/Winter season, fashion and footwear sales soared in the early half of the month as promotional pricing caught the eye.

“Furniture and home accessories continued their strong run as the improving property market enjoys its makeover.  Following a fairly admirable Christmas, January was also a reasonable month for the grocers with total food and drink sales remaining in the black, just, for the three months November to January.

“Heading into February, retailers will be turning attention to the next big promotional event in the calendar, Valentine’s Day and hoping to take a decent share of consumer spend as they’ll be facing stiff competition from both the experiential and leisure sectors.”

 Food & Drink sector performance

Joanne Denney-Finch, chief executive, IGD, said: “After encouraging Christmas trading, food and grocery sales settled back into the pattern seen last autumn of a slight year on year decline. Dry January has been gaining ground as a concept and sales of beers, wines and spirits were notably down on the same period last year.

“Looking ahead, competition is set to intensify even further as shoppers continue the trend for shopping little and often. Three out of ten (31 per cent) say they are shopping more frequently for groceries than three years ago and over a third (36 per cent) say that if their incomes rise this year they will shop even more frequently.”