High Street retailing "no light at the end of the tunnel"
The monthly BC/KPMG sales monitor reveals that UK retail sales values were down 0.3% on a like-for-like basis from February 2011, when sales had fallen 0.4%. On a total basis, sales were up 2.3%, against a 1.1% increase in February 2011.
Food sales picked up, helped by stocking up in the very cold weather. Non-food weakened further, despite continued promotions and discounts. For clothing, footwear and homewares, February was worse than January and December, especially for larger purchases, hit by consumer caution.
Non-food non-store (internet, mail-order and phone) sales growth slowed further after picking up sharply in December. Sales were 9.9% up on a year ago, down from 11.3% in January and 18.5% in December and also below the 10.4% in February 2011.
Stephen Robertson, Director General, British Retail Consortium, said: "The reality of weak sales shows that a convincing revival remains illusory.
"Falling inflation has eased the squeeze on household finances and halted the slide in consumer confidence but that's at risk from fuel price rises and Budget uncertainty. Unemployment is expected to rise further causing increased nervousness about job security, which is keeping confidence fragile. Any sense of improving optimism is not yet translating into more spending.
"Total sales growth is still below inflation, so overall customers are actually buying less than a year ago, while discounts are eating into margins. Food picked up but non-food sales deteriorated with goods affected by the slow housing market among those particularly struggling.
"In this climate of continued caution, the Chancellor must use the Budget to hold back business costs, which will support jobs, growth and the much-needed consumer turnaround."
Helen Dickinson, Head of Retail, KPMG, said: "February's results were similar to January's but with very different dynamics. Food performed better than in the previous month but many non-food sectors struggled. The timing of half term caused plenty of variability during February and swings in performance by individual retailers makes business planning all the more challenging.
"Consumers remain reluctant to spend unless encouraged by promotional activity. Thus, while the market is still growing slightly in headline sales terms, profitability continues to be eroded through loss of margins.
"Many retailers feel they're fighting very hard just to stand still at best and don't see any light at the end of the tunnel. However, there are retailers out there who deliver what the customer wants and needs – in terms of product, brand and price – which proves that if the proposition is spot on it is still possible to outperform the market and the competition."
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