The latest retail figures from BRC-KPMG reflect a poor month for trading in October, in which LFL sales decreased, despite a small rise in sales.
UK retail sales decreased by 1.0% on a LFL basis from October 2016, when they had increased 1.7% from the preceding year.
On a total basis, sales rose 0.2%, against a growth of 2.4% in October 2016 – the lowest growth since May, and below the 3-month and 12-month averages of 1.7% and 1.5% respectively.
BRC chief executive Helen Dickinson OBE comments: “It was a meagre month in October for retail sales as shopping activity slumped. With total growth at its lowest since May and below the 12-month average, retailers will have cause for concern as they prepare for the crucial run-up to Christmas.
“The decline was driven by the worst performance of non-food sales since our record began in January 2011, as consumers appear to have opted for outdoor experiences and excursions during half term, over visits to the shops. The growth in food sales meanwhile, adds some colour to this otherwise anaemic picture, but these figures are very much buoyed by inflation.
“Real consumer spending power has been on a downward trend in the last year as the acceleration in inflation has caused shoppers to become ever more cautious in considering what purchases they can afford. Many now face higher borrowing costs, given the rise in interest rates, which will only serve to heap further pressure onto household finances.
“Considering the intrinsic link between consumer spending and economic growth, the Chancellor should reflect on this disappointing state of play and deliver a Budget that allays the risks of a further slowdown in consumer spending, by keeping down the cost of living."
Paul Martin, head of retail, KPMG, adds: "The burning questions for retailers will be whether shoppers are holding off their purchases until Black Friday, and whether retailers can recover from this month’s poor performance to end the year on a high.
“With the Bank of England’s interest rate decision seeing the first hike in 10 years, we are likely to see a continuation of the sector's slowdown, with consumers having less disposable income to spend. The Autumn Budget also nears, and retailers will most likely be hoping for some form of relief, particularly after the challenges business rates created.”
Online sales of Non-Food products grew 4.0% in October, below both the 3-month and 12-month averages of 8.7% and 8.3% respectively. Online saw the lowest growth since these records began in December 2012, yet online penetration rate increased from 22.6% in October 2016 to 23.7% in October 2017, the highest penetration rate since December 2016.
