The British Retail Consortium’s retail sales monitor has found a growing “polarisation” between the food and non-food retail sectors as quarterly food sales dropped for the first time since its records began.
Overall UK retail sales in May were up 0.5% on a like-for-like basis (2% on a total basis), but the total figures were dragged down by a decline in food sales.
The BRC recorded a three-month 0.2% fall in total food sales (excluding Easter distortions), which represented the first sales fall over such a period since the organisation’s records began in 2008.
On a like-for-like basis food sales fell 2.2% averaged over the three-month period. Non-food sales rose 4.3% over the period on a like-for-like basis.
David McCorquodale, Head of Retail, KPMG said: “The main barrier to recovery is now the grocers’ battle over price.
“The deflationary effect of these prolonged discounting campaigns, whilst good for consumers, is feeding through to the grocers’ margins and share values. The constant price matching brings into question the long-term value of the grocers’ brands and positioning, but in the short term is providing the UK consumer with plenty of options.”
The BRC found that well-publicised price cuts on everyday basic items are having an effect, with more affordable products generating significantly higher volumes than others and creating overall downwards price pressure.
Food sales fell 0.9% in May against 0.4% on average over the past 12 months, confirming “the polarisation between food and non-food – and more generally between ‘essentials and treats’, whereby the latter clearly outperforms the former’”.
Clothing was the best-performing category in May, followed by footwear and home accessories.
Online sales, which only include non-food products, grew by 17% in May over the same period a year ago. Non-food online penetration rate was 18.7% in May, the second highest figure the BRC has recorded.
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