The beginning of the year saw retail sales pick up strongly following several years of decline. This upturn contributed to increasing demand for retail property in key locations and the first rise in rental values in the sector since the recovery. Unfortunately, a disappointing blip in September has seen sales fall to a low not seen since December 2008.
Although retailers had hoped that the Indian summer would encourage consumers to invest in clothing and DIY materials, it seems that the opposite has occurred and caused retail sales to fall by 2.1 per cent on a like for like basis compared to September 2013.
Furthermore total sales, which take into account new store openings, fell by 0.8 per cent, meaning last month’s performance was the weakest the retail industry has seen since the height of the banking crisis.
According to the latest sales monitor by the British Retail Consortium (BRC) and KPMG, clothing and footwear sales were particularly affected as the warm weather caused consumers to put off spending on their autumn and winter wardrobes. In fact, these categories recorded their steepest decline since April 2012 and March 2013 respectively.
KPMG head of retail, David McCorquodale, is hopeful that the coming wintry weather will reverse the poor fortunes of clothing retailers in the coming months.
He says; “The prolonged Indian summer wilted retail sales in September, leaving clothing retailers hot under the collar – selling woolly jumpers in warm weather is a tough ask, even for the most talented of sales staff!
“After a bumper summer, this is a disappointing outcome for retailers and has undoubtedly reversed some of the sales gains made in August.
“However, if temperatures drop to a more seasonal level this cooler weather will quickly turnaround retailers’ fortunes and help them to sell their autumn/winter ranges.”
This result is not overly surprising as a number of retailers, including top performer John Lewis, have in recent weeks expressed concerns regarding the impact of the Indian summer on the launch of their new season collections. Retail analysts also warned Marks & Spencer’s shareholders that the tepid reception of the chain’s autumn and winter line could cause a quarterly sales decline of up to 4 per cent.
BRC director general Helen Dickinson points out that, in terms of food sales, retailers are continuing to struggle amidst the supermarket price war. The pressure heaped on the “Big Four” has seen a drop of 1.7 per cent in food sales over the past three months.
She says; “In September we saw the lowest retail sales figures since December 2008 excluding Easter distortions.
“This can be attributed to a number of factors including the continuing decline in food sales: furthermore, there was exceptionally low demand for items such as boots and coats, resulting in the lowest fashion sales performance since April 2012.
“However, demand for big ticket items continues to be strong with furniture outperforming all other categories.”
Do you think that this sudden drop in the retail recovery can be solely attributed to the Indian summer, or are there other factors involved?
