Furniture was the star performer both online and off in BRC-KPMG's monthly Retail Sales Monitor this October, as consumers prepared for colder days at home – yet the overall trading picture remains bleak.
Total UK retail sales increased by +1.6% in October, against an increase of +1.3% in October 2021, BRC-KPMG reports. UK retail sales increased +1.2% on a LFL basis from October 2021, when they had decreased by -0.2%.
Over the three-months to October, non-food retail sales decreased by -1.2% on a total basis and -1.8% on a LFL basis. In October, non-food was in decline YoY.
Online non-food sales decreased by -6.3% in October, against a decline of -8% in October 2021. The non-food online penetration rate decreased to 39.9% in October from 42.0% at the same point last year.
However, these sales figures were not adjusted for inflation. Given that both the October SPI (BRC) and September CPI (ONS) show inflation running at historically high levels, the small rise in sales masked a much larger drop in volumes once inflation is accounted for.
BRC chief executive Helen Dickinson OBE says: “As the cost of living for consumers continued to rise, retail sales slowed in October. With November Black Friday sales just around the corner, many people look to be delaying spending, particularly on bigger purchases.
“Christmas will come later than last year for many and may be more gloom than glitter as families focus on making ends meet, particularly as mortgage payments rise. Retailers hope the World Cup and Black Friday will give sales a much-needed boost ahead of Christmas."
Paul Martin, UK head of retail, KPMG, adds: “Despite the price of goods being higher than 2021, retail sales during October grew by just over +1% in value YoY. This increase is being driven by inflationary pressures and does not tell the true picture of sales volumes dropping as consumers purchase fewer products per shop.
“Sales across almost every category both online and in-store fell YoY as consumers adjust to shrinking household incomes. Furniture, food and health products saved the day on the high street as consumers prepare for colder days at home. Online retailers saw sales decline in every category apart from furniture, as consumers head to the shops more frequently in search of bargains to manage daily expenditure.
“Retailers will be hedging their bets on a successful World Cup and Black Friday to boost sales during the crucial golden quarter. Given the economic headwinds, it is unlikely that the usual festive boost will be enough to counteract the ongoing issues that retailers face with rising costs, squeezed margins and falling demand. Many may feel that they have little choice but to reduce prices to hold onto customers, but with their own inflationary pressures to contend with, bumper promotions before Christmas could damage already tight margins further. Whilst Christmas is by no means cancelled as consumers focus on one bright spot amongst the economic clouds, retailers are facing possibly their toughest festive season in a decade as shoppers look to trade down, search out bargains and purchase less to meet the economic challenges ahead.”
