Retail sales fall again
Published: 08 June, 2011
May 2011 saw like-for-like sales down 2.1 per cent and total sales down 0.3 per cent
UK retail sales values were 2.1 per cent lower on a like-for-like basis from May 2010, when sales had risen 0.8 per cent. On a total basis, sales were down 0.3 per cent, against a 3.0 per cent increase in May 2010.
Food sales slowed markedly after April’s strong growth and non-food sales were also much weaker. As the weather cooled, consumers’ underlying uncertainty about jobs and incomes resurfaced, hitting clothing, footwear and homewares. Big-ticket purchases suffered most and were often promotion-led.
Non-food non-store (internet, mail-order and phone) sales growth slowed in May, but the comparison was with a very strong May 2010. Sales were 10.4 per cent higher than a year ago, compared with 13.7 per cent in April but over 20 per cent in May 2010.
Stephen Robertson, director general of the British Retail Consortium, said: "After two previous months distorted by the later Easter and extra bank holiday, this is a more realistic reflection of how tough conditions on the high street really are.
"The first half of May was better than the second, when the weather turned unseasonably wet and cold in many parts of the country, but customers' fundamental reluctance to spend is now clear to see. Households' disposable incomes continue to be squeezed by uncomfortably high inflation and low wage growth, while uncertainty over the effects of Government cuts is hitting consumers' sentiment about future finances.
“The VAT rise since last year is flattering the sales figures for most non-food goods, while renewed weakness in the housing market made life particularly difficult for retailers selling furniture and household goods.
“This new evidence of weak spending shows how important it is to support this soft patch in the recovery by keeping interest rates low."
And Helen Dickinson, head of retail at KPMG, added: “For the first time in a number of months we have a clearer picture of the underlying trend without the distortions of the timings of Easter and bank holidays, and it doesn’t make for happy reading. The last half of the month was the most challenging given the good weather and World Cup last year. Across the month, virtually all non-food sectors experienced negative like-for-like sales to varying degrees reflecting consumer’s reticence to spend as the disposable income squeeze tightens its grip. This, combined with falling margins driven by a greater focus on price, lower average transaction values and increasing manufacturing costs is leaving many retailers coping with a “double whammy” impact on cash flows.”
Looking at individual sectors, food sales slowed markedly after April’s strong growth which stemmed from this year’s later Easter. Sales held up in the warm sunny first half of May. But in the cooler second half of the month, sales fell back below their strong year-earlier level, when they had been boosted by hot weather.
Clothing sales fell back below their year-earlier level, weakening later in the month as the weather cooled. Childrenswear suffered most, but had been strongest in April. Women’s remained weaker than men’s, but shoppers continued to look out for special deals and promotions, often holding off buying until they saw good value.
After a strong sun-driven April and against a good May 2010, overall footwear
sales dropped back to show a year-on-year fall for the first time since August 2009. Women’s and children’s were hardest hit, having been stronger than men’s in April.
It was another difficult month for electricals with sales often promotion-led as underlying uncertainty about jobs and income prospects meant shoppers looked for good deals. TV sales were particularly tough, against last May’s World Cup trade. White goods held up, though were often replacement purchases, especially for larger items.
