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Retail sales figures in 3.2% boost

Published 14/04/2015

Food prices are falling at unprecedented rates for consumers after inflation turned negative for the first time in more than 50 years during April
Food prices are falling at unprecedented rates for consumers after inflation turned negative for the first time in more than 50 years during April

Supermarkets are mounting a "slow but steady fightback" as new industry figures showed a big jump in retail sales last month.

Retail like-for-like sales rose by 3.2% year-on-year, according to the British Retail Consortium (BRC) and KPMG, in the strongest growth since January last year. The period covers the five weeks to April 4 and was flattered by pre-Easter trading.

The gain is the third month in a row of retail sales improvement since a fall in December. Like-for-like sales lifted by 0.2% in February and January.

Food sales were the strongest contributor to growth last month, experiencing their strongest trading since July 2013, as shoppers stocked up ahead of the holiday period.

This was a ray of light for grocers amid the prevailing gloom of falling prices at supermarkets due to intense competition from discounters.

David McCorquodale, KPMG's head of retail, said there were signs of recovery in the grocery sector amid a slow but steady fightback.

However, he added: "Price deflation continues to dog the sector, and while supermarkets may be selling more, they are pedalling hard to stand still."

Today's figures also showed that stores contributed more to growth on a three-month weighted average than online sales for the first time since August.

Furniture and household appliances provided the second biggest contribution to the industry's growth, helped by the recovery in the housing market.

But clothing sales were subdued last month, particularly womenswear, as colder weather than a year ago made current spring and summer ranges less appealing.

BRC director general Helen Dickinson said: "All-in-all, retailers can also be satisfied with the consumer response to their Mother's Day and Easter offerings, but it is important to note that April figures will be impacted by the absence of Easter this year."

IHS Global Insight UK chief economist Howard Archer said: "Given the importance of consumer spending to the economy, a solid BRC survey for March following on from the very healthy retail sales in February would be reassuring for hopes that gross domestic product growth held up reasonably well in the first quarter."

Tesco has made gains under a turnaround led by new chief executive Dave Lewis, with till roll figures from Kantar Worldpanel showing sales grew 0.3% in the most recent 12-week period.

Sainsbury's also lifted sales by 0.2% to a 16.4% market share during the 12 weeks to March 29.

The closely watched Kantar survey said competition in the industry remains intense with pressure from discounters causing prices to fall across the industry for 19 months in a row as a result of higher levels of promotions and deflation in major categories such as vegetables, milk, eggs and bread.

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