Retail sales slip to lowest level this year as consumers remain ‘cautious’

Retailers are being advised to manage their promotional activity carefully ahead of the crucial Christmas sales period as they suffered their worst monthly sales performance this year in September.

High Street

Figures from the British Retail Consortium and KPMG showed that like-for-like UK retail sales rose just 0.7 per cent last month compared to a year ago, with food, furniture and clothing all experiencing sales declines. This makes it the slowest rate of growth this year, excluding Easter distortions.

While categories including electricals and leisure goods did see growth, KPMG is warning that consumers remain “cautious” ahead of the crucial Christmas period. This is despite signs that the UK economy is recovering, with manufacturing, construction and the services sectors all seeing improvements.

David McCorquodale, head of retail at KPMG, says: “These figures are a reality check and will make retailers nervous as we enter the run up to Christmas. Consumers are still cautious about spending.”

He added that with retailers now carrying less stock, promotional deals and offers designed to boost sales will need to be “managed carefully” in order to maintain margins. Speaking separately at the IDC conference in London, Procter & Gamble’s UK managing director, Irwin Lee, also cautions against using “unsustainable” value giveaways, saying retailers should instead focus on value creation.

“Our focus is on value creation to complement, if not offset, the over-reliance eon unsustainable value give away. There is nothing proprietary in price promotions. We believe promotions win quarters, but true innovation wins decades,” Lee added.

Online sales were once again a high point last month, seeing double-digit growth and helping to offset weakness on the high street. The BRC now has a new online retail sales monitor that shows online sales of non-food were up 13.4 per cent in September compared to a year ago, contributing a third of growth.

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