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BRC reports quiet month for DIY Sales in January

The BRC has released its UK retail sales figures and analysis for January, revealing an overall like-for-like (lfl) decline of 0.3% since last year, with the poor housing market adversely affecting the DIY industry.

Overall sales were up 2.1% against a 4.2% increase in January 2011, making this the second worst January on record since the BRC began its survey in 1995. Widespread heavy discounting and 'customer caution' over big-ticket items were largely blamed for poor sales.

The BRC's senior analyst Joscelyne Hynard said that dor DIY and gardening, "it was another quiet month, with sales hit by consumer caution and the weak housing market. Clearance discounts, promotions and new ranges benefited some, amid tough competition.

"The trend to improving homes rather than moving home favoured smaller decorating projects rather than more expensive home improvements. The mild weather hit heating and insulation but gardening showed some uplift."

Despite a favourable lfl sales report for the homewares and house accessories sector in December 2011, sales for January 2012 fell back below their year-earlier entry level.

"House textiles weakened but remained up on a year ago," said Ms Hynard. "Clearance markdowns helped some, especially where consumers could justify purchases as replacement needs. But consumer caution continued to hit larger purchases.

"Tight household finances meant gains were often limited to new, modern ranges and basic essentials rather than larger discretionary purchases, hence kitchen and bathroom products often outsold living and bedroom."

The climate was slightly more optimistic for furniture and floor-coverings sales, which saw its first year-on-year growth since July, thanks to clearances.

"The gain [here] was only small and underlying trade remained very weak and discount-driven," explained Ms Hynard.

"Consumer caution continued to hit big-ticket purchases such as fitted kitchens and bathrooms. Beds, living and dining furniture were better for some, but upholstery was difficult."

KPMG's head of retail Helen Dickinson said the underlying health of UK retail "remains a key concern."

She added: "Margins and profits [have been] squeezed by the relentless need to discount to generate demand. Many retailers are rethinking their entire business models in a desperate attempt to adapt to this low growth environment and pricing remains more strategic than ever before."

BRC director general Stephen Roberston said: "Big-ticket goods are still the weakest part of retailing, undermined further by the comparison with last year when beating the VAT rise and promotions linked to it helped sales.

"In 2011 overall like-for-like growth averaged virtually zero and that was with a boost to top line figures from inflation, including the higher VAT rate, which won't continue in 2012. Against that background, government must hold down the costs [for which] it's responsible."

Source: DIY

07 February 2012
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