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BRC Reports A Muted End To A Tough Year

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The British Retail Consortium has reported that retail sales for December 2018 were flat, with a 0.0% change year-on-year.  Like-for-like sales saw a 0.7% decline, year-on-year.

Top Line Figures:

Total sales (year-on-year): 0.0% (% change year-on-year)

Like-for-like sales (year-on-year): -0.7% (% change year-on-year)

Total non-food sales (3-month average): -0.4% (% change year-on-year)

Total food sales (3-month average): 1.8% (% change year-on-year)

All categories (3-month average) 0.5% (% change year-on-year)

Helen Dickinson OBE, Chief Executive, BRC: 

“Squeezed consumers chose not to splash out this Christmas with retail sales growth stalling for the first time in 28 months. The worst December sales performance in ten years means a challenging start to 2019 for retailers, with Business Rates set to rise once again this year, and the threat of a No-Deal Brexit looming ever larger.

“The retail landscape is changing dramatically in the UK, while the trading environment remains tough. Retailers are facing up this challenge but are having to wrestle with mounting costs from a succession of government policies – from the Apprenticeship Levy, to higher wage costs, to rising business rates.

“Retail makes up 5 per cent of the economy, yet pays 10 per cent of all business taxes and 25 per cent of all business rates. This is neither fair nor sustainable. The Government should urgently look into reforming the broken business rates system and champion the future of retail in the UK.”

Paul Martin, UK Head of Retail, KPMG: 

“Retailers experienced little festive cheer this year, with total sales in December delivering zero growth on last year. This comes despite some retailers desperately attempting to generate sales through slashed pricing, which has seemingly not been enough to encourage shoppers.

“Growth in food did provide a glimmer of hope, being among the few categories to notice an uptick. However, the continued contrast in performance between the high street and online remained evident in December - albeit 2018 did also see a continued slowdown in online retail sales.

“The first months of 2019 will unlikely hold much improvement. As many retailers report their festive trading performance, the list of winners and losers will become clear, but winning means more than just improving sales. Retailers have to protect their margins in order to deliver a profitable festive season.”

Food & Drink sector performance, Susan Barratt, CEO, IGD: 

“Despite the challenges elsewhere in retail, the grocery sector enjoyed a positive December, with an increase in sales on the previous year broadly in line with inflation.

“The desire to indulge over Christmas prevailed once more and seven in ten shoppers said they spent extra on higher quality food last month.

“However, that mood appears fragile with only 20 per cent of shoppers expecting to be better off financially over the next twelve months, the lowest level of confidence by this measure since June 2017.”

Comment

Founder and CEO of Yomdel, Andy Soloman, commented:

“While many bricks and mortar retailers would have been hoping for a Christmas miracle and an uplift in consumer spend over December, this has failed to materialise leaving many in a financially precarious position.

Of course, Brexit is curbing consumer appetite to an extent, but a far greater hurdle for the Great British high street is how to remain competitive against the value of online retail while being squeezed from the other end via a hike in business rates and an ever-increasing wage bill.

Now, more than ever, the retail sector needs to evaluate its consumer offering and how they integrate this with the changing face of the industry in order to create greater appeal, while streamlining operations and lowering overheads through the implementation of technology.

Those that manage to do so will evolve and survive but unfortunately, 2019 is likely to bring further casualties as even our big high street names continue to struggle.”

Source : Insight DIY Team and BRC

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10 January 2019

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