The retail industry is currently benefiting from a number of improvements in the UK economy, with a drop in inflation and a climb in real wage growth combining to encourage a lift in consumer spending. This saw sales rise strongly over Easter, with furniture and flooring sales particularly contributing towards April’s successful sales result.
During the month, like for like retail sales climbed by 4.2 per cent according to data from the British Retail Consortium (BRC) and KPMG’s Monthly Retail Sales Monitor. Flooring and furniture performed particularly well over the Easter weekend, with the pace of growth in this category accelerating at its fastest rate since Easter 2006.
Head of retail at KPMG, David McCorquodale, believes that the continuing influence of the government’s Help to Buy scheme helped to further elevate the traditional Easter home improvements boom.
He says; “The renewed confidence in the housing market inspired homeowners to invest in their property once again during April.
“Sales of furniture and flooring increased over the Easter break as consumers not only had the confidence to refresh their décor, but also to invest in big ticket items.”
Unfortunately, while furniture, flooring and children’s clothing all enjoyed a relatively profitable month, food sales continued to stagnate despite the numerous promotions run by retailers. In fact, on a three month basis, like for like food sales have dropped by 2 per cent, largely due to the impact of price drop campaigns and a fall in food inflation as a result.
Mr McCorquodale continues; “The last three months’ figures, which eliminate the distortion of Easter’s timing, reveal that total food sales have been flat at best.
“Price wars may be good news for consumers but mean that grocers have to urgently rethink business models to maintain margins.”
Yet while brands such as the “Big Four” UK supermarkets are struggling to grow market share and interest consumers in their food offerings, those specialising in non-food items are enjoying a spending boom not seen since before the recession struck. In the year to the 30th of April total retail sales rose by 2.8 per cent, while on a shorter term, 3 month basis like for like sales climbed by 0.3 per cent – a strong result, especially given the fact that stagnation in food sales pulled the overall result down somewhat.
BRC director general, Helen Dickinson, believes that April’s result indicates an ongoing strengthening of consumer confidence as a result of economic improvements.
She says; “There are now clear signs that the retail economy is expanding as retailers offer great new products and competitive prices to consumers who are still watching their spending very closely.
“Customers responded well to great deals and good ranges in children’s clothes, DIY products and furniture, although volumes of food sales did not rise significantly.
“Customers took advantage of the holidays to visit and buy their products in stores, which is a useful reminder that people still very much enjoy the great experience of shopping in store as well as online.”
Do you think this strong upward momentum will continue into summer?
