UK retail sales decreased by -0.1% YoY on a LFL basis in February. On a total basis, sales increased by +0.5%, against an increase of +1.6% in February 2018. Furniture, the best-performing category in January, ranked just 12th of 13.
The latest BRC-KPMG Retail Sales Monitor attributes this overall performance to Brexit uncertainty in the face of a no-deal outcome.
BRC chief executive Helen Dickinson OBE says: "Uncertainty surrounding the UK’s imminent exit from the European Union has hit consumer spending. While real incomes have started to rise over the past year, shoppers have been reluctant to spend this February, holding back growth. This slowdown was not limited to physical stores, with growth in online non-food sales well below the 12-month average.
“With consumers increasingly aware of the risk of a no-deal Brexit, it is likely that uncertainty has driven this cautious approach to retail spending. If Government wishes to reassure both the public and businesses, they should ensure a chaotic no deal – which would lead to higher costs, higher prices, and less choice for consumers – is taken off the table with immediate effect.”
Paul Martin, UK head of retail for KPMG, adds: “Following a modest recovery in January, February saw a slowdown in sales. While consumer spending has so far remained relatively resilient, driven by factors such as low unemployment and wage growth, it would seem that continuing political and economic uncertainties are beginning to notably affect shoppers’ spending habits.
“Across all categories there was sluggish growth, and the milder weather appears to have shifted the focus away from indoors, with furniture sales declining.
“Non-food continues to be under more pressure than grocery, with shoppers focusing on the essentials. To manage these dynamics, retailers have to continue managing cost and margin and carefully assess how to gain market share in a broadly flat market.”
Online sales of non-food products grew +5.4% (against +6.4% in February 2018), while online penetration rate increased from 27.5% in February 2018 to 29.6% last month.
