Period covered: January 17Published: February 07, 2017Read time: 1min

Retail Sales Monitor

Food Sales Remain Solid Whilst Non-Food Growth Flags

Helen Dickinson OBE, Chief Executive, BRC: “After a strong end to the Christmas trading, year on year sales growth ground to a halt, compensated only by stronger furniture sales and a boost for some retailers from Chinese New Year. While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January.

“Looking across the last three months, we’ve seen the slowest growth of the festive period since 2009. Closer inspection reveals that this was driven by slowing sales in non-food sectors.

“These figures suggest that 'caution' was top of new year shopping lists and the uptick in credit card lending at the end of the last year may be short lived. With the signs pointing to upward pressures on shop prices given rising import costs, all eyes will be on the impact of inflation on consumer spending. That said, retailers are a resilient and innovative bunch. They have become increasingly adept at responding to the challenging environment, and as a result the industry has been a key driver of recent UK productivity growth.”

Paul Martin, Head of Retail, KPMG: “Performance in January is likely to have left retailers feeling a little deflated, particularly following the strong top-line sales growth reported by many over the Christmas period. Compared to last year, retail sales were down 0.6 per cent on a like-for-like basis this January – somewhat mirroring the sense of back-to-work sluggishness many feel at the start of the new year.

“As is historically the case in January, furniture sales experienced strong performance, with the new year perhaps prompting shoppers to consider new look décor.

“Food and drink sales remained in the black, much to the relief of grocers. However, with New Year resolutions rejigging the shopping list, healthier items are likely to have been the focus.

“With consumer price inflation beginning to kick-in alongside retailers’ costs also rising, the sector will need to continue to examine its cost-base as this will be a vital element of success in 2017.”

Food & Drink sector performance, Joanne Denney-Finch, Chief Executive, IGD: “After strong Christmas sales, grocery retailers were relieved to see solid, if unspectacular, sales in January. The first week was dampened by an extra Bank Holiday Monday but the rest of the month was positive, helped along by a small amount of inflation.

“Shoppers will be watching food prices closely. Two-thirds (65 per cent) believe food prices will have the biggest impact on their personal finances this year, ahead of energy bills (58 per cent), petrol prices (53 per cent) and interest rates (28 per cent). Some recent cost increases for producers have begun to take effect but with currencies in such a state of flux, the picture for later in the year is very hard to predict.”