BRC-KPMG RETAIL SALES MONITOR NOVEMBER 2009: CHRISTMAS: ALL TO PLAY FOR

CHRISTMAS: ALL TO PLAY FOR

• UK retail sales values rose 1.8% on a like-for-like basis from November 2008, when sales had dropped 2.6%, due to turmoil in financial markets hitting consumer confidence. On a total basis, sales rose 4.1% against a 0.4% decline in November 2008.
• Food sales growth slowed further, largely reflecting lower food price inflation. Clothing and footwear also slowed after October’s uplift. Homewares and furniture sales showed further gains, but against larger declines a year ago.
• Non-food non-store sales (internet, mail-order and phone sales) in November were 16.9% higher than a year ago compared with 18.0% in October. The slower growth rate in November than in October was in line with the slowdown in store sales.   

Stephen Robertson, Director General, British Retail Consortium, said: “We would have expected much stronger growth because the comparison is with very poor results in 2008 when November was the second worst performing month of the year. “Growth was weaker than a strong October, but it’s not as bad as it seems. A lot of this was down to the sharp fall in food inflation which continues to dampen food retailers’ sales. But non-food sales growth improved as the Christmas build-up began.  In particular, discounts and downpours boosted boot and shoe sales – while the milder weather hit clothing sales. There was continued growth in non-store non-food sales.

“Consumer confidence is fragile and has taken a turn for the worse. We’re the only major economy still in recession. Uncertainty over jobs and future tax increases and Government spending cuts is making customers more cautious. Retailers are hopeful of a better Christmas than last year's dire performance, but it's still all to play for."

Helen Dickinson, Head of Retail, KPMG, said: “On the face of it, a disappointing result for November given that October showed the best like-for-like growth since 2002.  However, once the fact that food sales growth slowed further is factored in, largely reflecting lower food price inflation, it represents a solid start to Christmas trading.  Clothing did suffer on the back of poor weather and comparisons with 2008 when more 'discount days' were held by a number of the large multiples.  Furniture and flooring and other home related sectors had another good month reflecting a combination of pent up demand and the focus on the home this Christmas.  Although regaining ground lost in the early run up to Christmas is difficult, if not impossible, many retailers will be quietly confident that their performance will not be anywhere near as bad as some may have expected six months ago.“

Food & Drink – Steve Barnes, Business Director, IGD, said: “As shoppers gear up for the festive period, it is encouraging that the food and drink market continued to grow in November, despite falling food inflation and cycling against strong growth during the same period last year.

“The battle for Christmas customers has begun in earnest and shoppers are already benefitting from eye-popping promotions and loyalty scheme rewards. Retailers will have to work particularly hard to secure the traditional festive uplift this year as we enter our second ‘recession Christmas’ in a row.”

Non-Food Non-Store* - Sharon Hardiman, Head of Non-Store Retailing, BRC, said:

 "This is more strong growth. The figure is similar to October but it’s nearly double the rate of November last year and shows online sales growing four times faster than sales overall.


"With confidence in shopping online continuing to rise and no threat of further postal strikes this year, there's a lot of online Christmas shopping still to be done."


Notes: The BRC-KPMG Retail Sales Monitor measures changes in the actual value (including VAT) of retail sales from a sample of retailers. The Monitor measures the value of spending and hence does not adjust for price changes. If prices are rising, sales volumes will increase by less than sales values. In times of price deflation, sales volumes will increase by more than sales values.

Retailers report the value of their sales for the current period and the equivalent period a year ago. These figures are reported both in total and on a ‘like-for-like’ basis.

Total sales growth is the percentage change in the value of all sales compared to the same period a year earlier. The total sales measure is used to assess market level trends in retail sales. It is a guide to the growth of the whole retail industry, or how much consumers in total are spending in retail – retail spending represents approximately one-third of consumer spending. It is this measure that is often used by economists.

'Like-for-like' sales growth is the percentage change in the value of comparable sales compared to the same period a year earlier.  It excludes any spending in stores that opened or closed in the intervening year, thus stripping out the effect on sales of changes in floorspace. Therefore like-for-like sales growth will always be lower than total sales growth. Many retailers include distance sales as a component of like-for-like comparable sales.

The like-for-like measure is often used by retailers, the city and analysts to assess the performance of individual companies, retail sectors and the industry overall, without the distorting effect of changes in floorspace.

Non-Food Non-Store sales are transactions which take place over the internet, or via mail order or via telesales. They are part of total sales as reported by the retailer participants. Non-Food Non-Store sales growth is the percentage change in the value of all non-food non-store sales compared to those in the same period a year earlier.  It is a guide to the growth of sales made by this non-store channel.  It should be noted that Non-food Non-store sales are still a very small proportion of total UK retail sales. Estimates based on ONS figures show that less than 4 per cent of total UK retail sales (food and non-food) are achieved via the non-store channel.

The responses provided by retailers within each sales category are re-weighted (based on ONS weightings) to reflect the contribution of each category to total retail sales, thus making it representative of UK retail sales as a whole. Because the figures compare sales this month with the comparable period last year, a seasonal adjustment is not made. However, changes in the timing of Bank Holidays and Easter can create distortions, which should be considered in the interpretation of the data.

As well as receiving sales value direct from the retailers in the scheme the BRC-KPMG Retail Sales Monitor also receives food and drink sales value data from the IGD's Market Track Scheme.

In its role as sponsor of the BRC-KPMG Retail Sales Monitor, KPMG is responsible for the aggregation of the retail sales data provided by the retailers on a weekly basis. This data consists of the relevant current week’s sales data and comparative sales figures for the same period in the prior year. The aggregation has been performed by KPMG on data for periods following 2 April 2000 and equivalent prior periods. The accuracy of the data is entirely the responsibility of the retailers providing it. The sponsorship role has been performed by KPMG since 10 April 2000 and save for the aggregation of comparative sales figures for the period from 2 April 2000 it is not responsible for the aggregation of any data included in this Monitor relating to any period prior to 2 April 2000. The commentary from KPMG is intended to be of general interest to readers but is not advice or a recommendation and should not be relied upon without first taking professional advice. Anyone choosing to rely on it does so at his or her own risk. To the fullest extent permitted by law, KPMG will accept no responsibility or liability in connection with its sponsorship of the Monitor and its aggregation work to any party other than the BRC..