Retail sales enjoy healthy growth in January, latest BRC-KPMG Retail Sales Monitor reveals

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UK retail sales increased by 0.2%, on a like-for-like basis from January 2014, when they had increased 3.9% on the preceding year, according to the latest BRC-KPMG Retail Sales Monitor.

On a total basis, sales were up 1.6%, against a 5.4% rise in January 2014 and above the 12-month average of 1.4%.

Adjusted for the BRC-Nielsen Shop Price Index deflation, total growth was 2.9%.

Total Food sales grew for the second consecutive month in January and showed a 0.2% rise over the last three months, its best performance since February 2014. The Non-Food performance was helped by the continuation of end-of-season sales into January.

Online sales of non-food products in the UK grew 11.7% in January versus a year earlier, when it had grown 19.2%. The Non-Food online penetration rate was 18.4%, up from 16.8% in January 2014.

Helen Dickinson, director deneral, British Retail Consortium, said: “Retail sales have continued to grow with January reporting a respectable 1.6 per cent increase. Looking into the numbers a little more closely gives us even more cause for optimism – last year retailers had a bumper January so to see growth against such a tough comparison shows the industry to be in rude health. Customers were offered attractive bargains on winter ranges but it remains to be seen at what cost to the retailers’ margins.

“Shoppers were in the mood to buy products aimed at helping them lead a healthier lifestyle – from fruit and veg to exercise equipment, all these kinds of products have been selling strongly. Given the time of year this is no surprise and retailers have capitalised by making sure they have the right stock, at the right price to help consumers achieve their New Year goals.”

David McCorquodale, head of retail, KPMG, said: “After a subdued December, retailers experienced a semi-revival in fortunes as shoppers took advantage of the bargains on offer in the January sales. The clothing, toys and household appliances sectors particularly benefitted from this spending spree, notching up year-on-year growth against tough comparables from the year before.

“These figures clearly demonstrate the difficult cycle that retailers are trapped in. Demand is now almost solely driven by discounts, with shoppers very reluctant to buy goods at full price in the hope that yet another sale could be just around the corner.  This promotion-led environment risks becoming the new normal: retailers are struggling to persuade consumers to break the habit and go back to the traditional sales cycle.

“The grocery sector saw its first growth in three-month average total sales since the first half of last year – an encouraging sign from the battlefield.  With consumers benefitting from lower fuel and petrol prices, retailers are fighting for their share of these savings.”

Food & drink sector performance

Joanne Denney-Finch, chief executive, IGD, said: “The year started promisingly for food and drinks sales, with year-on-year growth in every week during January – the first time this has happened since February 2014.

“The sector is at last seeing modest benefit from the recovering economy and confidence is growing. IGD’s ShopperVista research shows that over a fifth of shoppers expect to be better off in 2015, the highest since we began tracking this in September 2010. Shopper confidence is being boosted by lower fuel and grocery prices. A record 23% expect food prices to fall further this year and interest in quality is building, with a quarter of people now prioritising this when shopping for food and drink.”