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Weather and Rio Olympics blamed for slip in retail sales

Published 06/09/2016

Shopping lost some of its attraction to those distracted by hot weather and the Rio Olympics
Shopping lost some of its attraction to those distracted by hot weather and the Rio Olympics

Retail sales slipped last month as hot summer weather and Team GB's glittering success at the Rio Olympic Games distracted shoppers from spending, a report has revealed.

The British Retail Consortium-KPMG survey found that total retail sales fell 0.3% in August, compared to a 0.1% rise in the same month last year, while like-for-like sale also took a downward turn, sliding 0.9% over the period.

The slump in total sales was the weakest performance since September 2014 - excluding the distortions to the figures over the Easter period - as shoppers concentrated on enjoying the sunshine rather than stocking up on Autumnal products. the study said.

However, the balmy weather heralded brighter fortunes for the grocery sector, as total food sales lifted 0.9% between June and August - its highest level outside of the Easter period since December 2013,

Helen Dickinson, chief executive of the BRC, said the success of Team GB brought a feelgood factor to the UK, but this failed to translate into stronger sales.

" Consumers were enticed towards leisure and outdoor activities rather than shopping, although food did post its strongest performance in more than two years; fuelled by demand for picnic, barbeque supplies and celebratory drinks.

"Care should be taken in reading too much into August's lacklustre performance. As we've seen in the last couple of months, data portending the health of the economy paint a volatile picture.

"The fact is that so far little has directly changed for the UK's consumers as a result of the referendum, so it's the pre-existing market dynamics that are still driving sales.

"The slowdown in real wage growth in the first half of 2016 and strong competition will continue to weigh on trend growth in total sales; whilst holiday timings, promotional and seasonal activity will contribute to fluctuations month on month."

The update comes as spending remains buoyant despite fears Brexit uncertainty would hit retail sales after Britain voted to leave the European Union.

The Office for National Statistics (ONS) announced last month that retail sales had leapt 1.4% in July, with economists pencilling in a rise of 0.1%.

It comes after retail sales suffered their sharpest fall in six months in June, contracting by 0.9% from a month earlier.

Speaking about the retail sales monitor, David McCorquodale, head of retail of KPMG, said sales of women's fashion performed poorly despite widespread promotions.

He added: "The warmer weather made it almost too hot to shop and dissuaded shoppers from looking at the newly arrived autumn products.

"Despite this, jewellery sales continued to benefit from international shoppers taking advantage of the weaker pound. Whilst for those at home, some of whom may have opted for a staycation given the exchange rate, the warmer weather put wine and barbeques firmly on the menu - much to the delight of food and drinks sellers."

Shoppers enjoyed falling prices in August as the cost of food hit a record low and retailers continued to roll out discounts, according to BRC-Nielsen study published on Monday.

It revealed that overall shop price deflation of 2% in August, compared to a 1.6% decline the month before.

The slide in prices was triggered by more promotions from retailers coupled with a drop in the cost of oil, according to the shop price index.

Britain's grocery sector continues to be gripped by a supermarket price war, sparked by the rise of German discounters Aldi and Lidl.

A separate survey from Barclaycard saw consumer spending surge to a 13-month high of 4.2% in August, picking up from 2.6% growth in July, as it said warmer weather inspired shoppers to fork out on clothes and entertainment.

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