July saw UK retail sales increased by 1.1% on a LFL basis YOY, when they had increased 1.2% from the preceding year, according to the latest BRC-KPMG Retail Sales Monitor.
On a total basis, sales rose 1.9%, against a 2.2% increase in July 2015 – the strongest growth since January.
However, the home categories suffered from the few weeks of very hot weather, bringing the three-month average growth to its lowest level since May 2014. That said, even though furniture sales slowed down, they remained in solid growth territory, in fourth position in the monitor's growth rankings table.
GfK’s Climate for Major Purchases Index dived by 11 points from +9 in June to -2 in July, but, according to BRC-KPMG there is little evidence that the weaker performance of furniture sales is a sign of consumers choosing to put off all larger purchases.
Helen Dickinson OBE, chief executive, British Retail Consortium, says: “This month’s solid sales figures may come as a shock to some given the slew of early indicators suggesting that consumer activity was slowing in the wake of the referendum result. However, little has materially changed for most UK households in the wake of June 23rd, so it is not surprising to us that sales are simply responding to their normal underlying drivers. A heavy month of promotions proved very successful in appealing to bargain-hungry shoppers, boosting sales growth to 1.9 per cent, ahead of the 12- month average of 1.2%.
“The big question for retailers is whether that success can be carried forward into full price sales. Whilst retailers continue to monitor the situation in the wake of Brexit, responding to rapid and complex change in consumer behaviour in the midst of a highly-competitive market remains the substantive challenge. The industry is in the process of productivity-enhancing transformation, but Government needs to play its part to ensure that change is not suffocated by increasing costs.”
David McCorquodale, head of retail, KPMG, adds: “The sun shone down on retail fortunes in July with total sales increasing 1.9% versus 2015. Warmer weather helped blow away some of the post-referendum blues, boosting the UK feelgood factor and giving consumers a sense that ‘life goes on’ following the initial shock of the Brexit vote.
“This first full month of retail sales figures post-vote suggests that UK shopping patterns haven’t changed versus previous years. For retailers, plans to improve productivity remain top of mind to guard against recent increases to their cost base as well as making sure they can weather what are likely to be more uncertain times ahead.”