Consumers cautious ahead of budget
Published: 17 June, 2010
UK retail sales values rose 0.8 per cent on a like-for-like basis from May 2009, when sales had fallen 0.8 per cent. On a total basis, sales were up 3.0 per cent against a 0.8 per cent increase in May 2009.
Food sales returned to growth after April’s Easter-distorted fall. Clothing and footwear benefited from the sunny weather, as did outdoor DIY and leisure. Homewares showed some improvement but big-ticket items often struggled, despite further discounts and promotions, in the face of consumer uncertainty about job and income prospects.
Non-food non-store sales (internet, mail-order and phone sales) in May were 21.9 per cent higher than a year ago, up from 15.9 per cent in April. Although the best since December, May’s gain was against relatively weak growth in May 2009.
Stephen Robertson, director general of the British Retail Consortium, said: “The sunnier second half of May provided a welcome boost to overall sales. The warmer weather combined with discounts and promotions encouraged spending on clothing, footwear, outdoor DIY and gardening.
“The run-up to the World Cup helped sales of televisions, though this was largely discount-driven. With the tournament getting closer, there should be a further uplift and to other football merchandise such as flags and replica kits. After April’s dip, food sales growth returned to more normal levels.
“Consumer confidence has clearly improved since last year’s lows. But there’s still plenty of uncertainty, which is making customers nervous about buying expensive goods, such as furniture, despite widespread reductions. This month’s emergency Budget should provide more clarity.”
And Helen Dickinson, head of retail at KPMG, said: “May’s results are more indicative of the underlying trend as the last couple of months were impacted by the timing of Easter. The election campaign didn’t shift consumer spending patterns much either one way or the other but whether the forthcoming Budget will be more damaging remains to be seen and many retailers remain reliant on promotional activity to drive footfall and sales. While clothing and footwear overall had a good month, women’s clothing continued to underperform in this sector as a whole. However, furniture and floorcoverings was once again the worst-performing sector, highlighting the reluctance of consumers to commit to big-ticket purchases while uncertainty over the future looms.”
And Joscelyne Hynard, senior analyst at the BRC noted that sales growth picked up after a weak April, but the improvement was against a sharp fall in May 2009. “Trade varied with the weather, strengthening in the second half when the sun brought out pent-up demand for summer clothes,” she said.
“Menswear growth was stronger than women’s, but against a larger fall a year ago. Overall, childrenswear outperformed adult’s clothing, being seen as more essential.” And footwear sales growth was slightly better than in March and April.
Electrical and electronic sales were mixed, with a World Cup boost starting to help TVs, albeit amid widespread offers, but consumer caution still affecting sales in other sectors. “Being uncertain about the outlook for their jobs and incomes, shoppers looked for good deals and so growth was often promotion-driven,” said Hynard.
