Bigger discounts boost retail demand

Total retail sales increased by 0.6 per cent in October, against an increase of 1.3 per cent in October 2018 – the best performance since April this year, according to the latest British Retail Consortium (BRC) and KPMG figures.

However, over the three months to October, in-store sales of non-food items declined 3.6 per cent on a total and 3.7 per cent on a like-for-like basis. This is worse than the 12-month total average decline of three per cent, although the October decline was the shallowest since July.

Over the last quarter food sales increased 0.5 per cent on a like-for-like basis and 1.6 per cent on a total basis – in line with the 12-month total average growth of 1.6 per cent.

During the same period, non-food retail sales in the UK decreased by 1.9 per cent on a like-for-like and 1.8 per cent on a total basis – below the 12-month total average decrease of 1.1 per cent.

Online sales of non-food products grew 5.1 per cent in October, albeit against a growth of 7.6 per cent during the same month last year. This was the strongest growth since February though, higher than the three-month and 12-month average growth of 2.5 per cent and 3.6 per cent respectively.

The non-food online penetration rate increased from 29.8 per cent in October 2018 to 31.6 per cent last month.

BRC chief executive Helen Dickinson explained that retailers embarked on an “extraordinary” period of discounting this October as they tried to entice shoppers into making purchases.

“Fashion shops were particularly active, helping non-food return to growth for the first time since July – unfortunately, the longer-term trend remains bleak with the 12-month average sales growth falling to a new low of just 0.1 per cent.

“With Brexit still unresolved and a December election creating new uncertainties, retailers will be looking nervously at the months ahead,” she continued, adding: “Nonetheless, the general election offers politicians of all parties an opportunity to protect local retail jobs, local shopping locations and the local communities they support.”

KPMG’s UK head of retail Paul Martin noted: “Aggressive promotion to move stock has seemingly benefited fashion sales, both on the high street and online. However, the jury’s still out on whether that progress will benefit the retailers’ bottom line.

“Online sales have returned closer to normality, with a 5.1 per cent uptick in October, but growth online remains muted – fierce focus will be placed on the upcoming Black Friday and Cyber Monday events to kick things into better shape.”

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