Retail Sales Monitor
New Year Joy for UK Retail
Helen Dickinson OBE, Chief Executive, BRC:
It is encouraging to see such strong sales in January, even once inflation has been accounted for. Food sales were more muted than in previous months, as people went back to eating out more often. Consumers prioritised home purchases, boosting the sale of household appliances, electronics and homeware. In what may be signs of a return to pre-pandemic trends, furniture was the stand-out performer in January, after transport delays in the Christmas period began to ease.
Retailers and consumers face challenges in the coming months. Retailers face competition from other spending opportunities as the public flood back to restaurants, cafes and live events. Furthermore, rising inflation, driven by higher costs of production, higher energy and transport prices, as well as other looming price hikes this Spring will mean consumers will have to tighten their purse strings.
Paul Martin, UK Head of Retail, KPMG:
Retailers will be relieved that we started the year without further lockdowns as consumer demand continued strongly on the high street with sales up 11.9% on last year. However, this unusually strong performance for January which is traditionally a slower month, should be put in the context of last year’s lockdown restrictions.
Footwear, furniture and jewellery saw strong sales growth in stores whilst spending on food and drink, toys and computing all fell during January.
Unsurprisingly, online sales were down across all categories compared to January 2021, with items for the home seeing the biggest fall in sales volumes.
With Covid restrictions now eased, and people heading back to workplaces, retailers will be hoping consumer confidence remains robust to help offset the rising cost challenges that they are likely to experience for a while. We could see a challenging few months ahead if wider macroeconomic conditions start to squeeze household incomes to the point that they start cutting back on retail spending. Retailers are facing their own inflationary pressures and will need to take tough decisions on whether and how to pass on the increase costs they have been sitting on for some time to consumers facing their own financial challenges. We could easily see the health of the sector start to deteriorate if consumers choose to sit on savings to weather the storm.
Food & Drink sector performance, Susan Barratt, CEO, IGD:
After a welcome uptick in food and drink sales at Christmas, 2022 has started on a downbeat note with sales struggling to match those of January 2021. Although it was always going to be a hard benchmark as we were in the peak of a third national lockdown in January last year, with food and drink sales surging as a result.
Following the respite of Christmas celebrations, the new year has brought increased shopper anxiety and IGD’s Shopper Confidence Index reached its lowest level since the index started in 2013. With the cost of living rising at its fastest rate in 30 years, our ShopperVista insight reveals that 89% of shoppers expect food to get more expensive in the year ahead. Coupled with the energy price cap set to rise sharply from April, some 39% of shoppers expect to be worse off financially in the year ahead, up 8% from last month. Therefore, we can expect more shoppers to increasingly focus on tightening their spending in the months ahead.
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