Retail sales down by 1.9%, record lost since 1995

The British Retail Consortium’s latest Retail Sales Monitor shows a dramatic fall in retail sales values for March this year compared with March 2010. “Total sales are down by 1.9%, the worst fall since we started collecting these figures in 1995”

sums up the institution. In an article for Sky News, the British Retail Consortium explains how low consumer confidence has affected retailers and highlights a sad record: retail sales have registered the steepest fall for 16 years.

As the just released study ‘BRC-KPMG RETAIL SALES MONITOR MARCH 2011’ states, UK retail sales values were down 1.9% on a total basis from March 2010, when sales had risen 6.6%, boosted by Good Friday and Easter Saturday falling in the March trading period. On a like-for-like basis, sales were 3.5% lower, against a 4.4% increase in March 2010.
 
Like-for-like food sales fell well below their year-earlier level and non-food sales showed an even larger decline. Consumers' underlying uncertainty about jobs and incomes, as well as the later Easter, hit both. Big-ticket home and furniture purchases suffered most and were often promotion-led.
 
“We knew 2011 was going to be a tough year for retailers. Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for 30 years” recognises Stephen Robertson, British Retail Consortium Director General, to the private TV channel.

“There’s pressure from mounting household bills, falling house prices and higher VAT. Consumer confidence is struggling as people worry about job losses and the prospect of more tax rises. In addition, higher National Insurance has just arrived” adds Robertson.
 
According to the retailers association, the fact that the Easter spending boost falls in April this year but was mostly in March last year is a contributory factor, but this drop goes way beyond anything that can be explained by that alone. To them, it’s clear customers are cutting back on non-essential spending and making the most of any special offers or promotions that are available.
 
“Non-food sales have seen a significant decline. I was speaking to the boss of a major non-food retailer just last week who told me sales were in free-fall because consumer confidence is in paralysis. He doesn’t expect to see significant improvements any time soon”, points out Robertson.
 
Consumer reluctance to spend on things they don’t consider essential means sales of big ticket items are being driven by discounting. Even clothing sales are suffering – seeing their largest decline since August 2009.
 
“Sunny weekends and the approach of Easter and the Royal Wedding should offer some relief, but it’ll take more than a few Bank Holiday weekends to change the fundamentally gloomy realities” concludes the executive for the British Retail Consortium.
 
Helen Dickinson, Head of Retail, KPMG, said: “The food sector suffered in the month due to Easter purchasing falling into March last year, thus impacting the overall results. However, beyond this the trend continues in a marked downward direction: non-food continues to struggle, with big-ticket and home-related sectors again being the hardest hit. We have seen an emergence of new, lower spending patterns since the middle of January, which are currently continuing to trend downwards. Many retailers will not be able to sustain this ongoing weakness in demand beyond the short term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the royal wedding. However, as disposable income continues to fall, without reducing saving or increasing borrowing – which would oppose current trends – this will not be possible.”