Uncertainty around UK’s imminent exit from European Union has hit consumer spending in UK. On a total basis, sales increased by 0.5 per cent in February 2019 compared to 1.6 per cent in February 2018, says a report by British Retail Consortium (BRC) and KPMG. This is below both the 3-month and 12-month averages of 0.9 per cent and 1.2 per cent respectively.
In February, UK retail sales decreased by 0.1 per cent on a like-for-like basis from February 2018, when it had increased 0.6 per cent from the preceding year.
Over the three months to February, in-store sales of non-food items declined 2.8 per cent on a total basis and 3.1 per cent on a like-for-like basis. This is below the 12-month total average decline of 2.4 per cent.
Over the three months to February, non-food retail sales in the UK decreased 0.6 per cent on a like-for-like basis and 0.4 per cent on a total basis. This is below the 12-month total average decrease of 0.2 per cent.
Online sales of non-food products grew 5.4 per cent in February, against a growth of 6.4 percent in February 2018. This is below the 3-month average of 5.6 per cent and pulls down the 12-month average to 6.9 per cent.
“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,” said Helen Dickinson OBE, CEO, BRC.
“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,” added Dickinson.
“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,” said Paul Martin, UK head of retail, KPMG.
“Across all categories there was sluggish growth, and the milder weather appears to have shifted the focus away from indoors. 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.” added Martin.