UK retailers see sales growth in 'tough' January

Like-for-like retail sales rose 0.6 per cent in January, compared with a fall of 0.6 per cent for the same month in 2017

Janaury retail figures have been dubbed as a decent performance by experts (AFP/Getty Images)

British retailers continued to battle "tough" conditions in January, but experts pointed to higher sales during a typically difficult month for trading.

Figures from the British Retail Consortium (BRC) and KPMG showed like-for-like retail sales rose 0.6 per cent in January, compared with a fall of 0.6 per cent for the same month in 2017.

Total sales rose 1.4 per cent last month, following a rise of just 0.1 per cent a year ago.

It was dubbed a decent performance by experts, as the post-Christmas period tends to put a strain on sales.

Helen Dickinson, BRC chief executive, said: "The persisting tough trading environment played out at the start of the year with a mixed set of trading updates and subsequent announcements.

"Sales as well as profits are seemingly harder to come by.

"Against this challenging backdrop, 2018 didn't have a bad start during what is traditionally a lean month, with sales creeping up in line with the year's average."

She said that the sector continued to struggle from "divided fortunes" for food and non-food sales.

British households are still in the midst of an income squeeze on the back of higher inflation and weaker wage growth that has left consumers with less cash for non-essentials.

Food sales increased increase 2.9 per cent on a like-for-like basis in the three months to January, while total sales rose 4.1 per cent over the period.

In contrast, like-for-like non-food retail sales fell 1.2 per cent and dropped 0.6 per cent on a total basis, which is below the 12-month average decrease of 0.1 per cent and marks the first 12-month average drop since September 2009.

Non-food sales fared better online, rising 5.3 per cent in January - but that still fell short of the 8 per cent growth booked in digital sales during the same month a year earlier.

In store, those sales fell 2.9 per cent on a total basis in the three months to January, and 3.6 per cent like-for-like.

"Clothing, however, bucked the winter trend for the non-food categories. Some retailers were able to scale back promotions, having shifted more of their stock during the festive sales than last year, and saw encouraging early demand for their new season ranges," Ms Dickinson said.

"Overall though, the going remains bumpy as consumers are still seeing wages fall in real terms. Although inflation will ease a bit this year these pressures will remain."

The BRC chief said it was essential that a Brexit transition deal is secured to provide "much needed certainty" to consumers and businesses.

Separate figures from Barclaycard showed consumer spending jumped 3.9 per cent year-on-year last month, propelled by a 4.1 per cent rise in spending on everyday essentials.

Spending on non-essentials grew 3.8 per cent but was down from 4.2 per cent in December as clothing and travel logged weaker growth.

However, evenings out with family and friends drove a double-digit rise in pubs and restaurants - up 12.8 per cent and 10.5 per cent, respectively.

Paul Lockstone, managing director at Barclaycard, said it was a strong start to the year in terms of spending, but "faltering confidence levels" suggests consumers are suffering from a "post-Christmas slump" and the wider impacts of inflation.

"While spending on the 'experience economy' proved to be a natural and welcome antidote to the January blues, the dip in sentiment revealed by our consumer confidence data, allied to concerns over economic and political uncertainty, is quite telling," he said.

"It suggests that caution will continue to be the watchword for many consumers as they allocate their household budgets in the months ahead."

PA