Non-food demand stalls
In-store non-food sales grew 0.1%, and online non-food sales grew 0.7%. Both were weaker than a year earlier. Linda Ellett, UK head of consumer, retail, and leisure at KPMG, said non-food sales were essentially flat in September and have slipped slightly over the past three months. Clothing and footwear had a weak month because of the warm weather, while back-to-school spending helped.
Footfall also fell. Visits to UK retail destinations were down 2.9% year on year in September. Shopping centres fell 3.5%, and high streets fell 3.0%.
Sales values trail inflation
The BRC monitor records the value of sales, not volumes. CPI inflation was 3.1% in August, so a 1.3% rise in September sales values suggests volumes fell in real terms. The comparison is approximate, because CPI covers all consumer prices and not only retail goods.
Official data for the summer was stronger. The ONS estimates retail sales volumes rose 0.5% in August and 0.9% over the three months to August. Its September figures are due on 23 October. They will show whether the retail sales slowdown in the BRC data extends across the wider market.
Confidence is also weakening, which is a risk for UK retail sales heading into Christmas. In the BRC-Opinium survey, consumers’ expectations for the economy over the next three months fell to -34 in September from -28 in August. That ended four months of improvement.
Budget impact on retail
Healey delivers his first Budget on 28 October. The Office for Budget Responsibility (OBR) will publish its forecast the same day. The BRC wants the business rates multiplier frozen. It warns that another rise in business rates would push up prices and put local jobs at risk. Marks & Spencer and John Lewis have made similar calls. Separately, a BRC poll found nine in 10 UK adults want the government to put the cost of living first in the Budget.
Deferred or lost demand
Ellett said some shoppers may be waiting for Black Friday promotions. If September’s weakness is deferred demand rather than lost demand, retailers can still recover it. They will need to weigh discounts against margins. UK retail sales growth over the Christmas period will depend on how the Budget affects household bills and business costs, as well as on promotions. Three releases will show the direction of retail market trends in the UK this autumn: the ONS September data on 23 October, the Budget five days later and the BRC figures covering Black Friday.