Figures out today made for grim reading as retail buy rates for January dropped compared to the same time last year.

On a total basis, sales increased by 0.4% in January, against an increase of 2.2% in January 2019. This is above both the 3-month and 12-month average declines of 0.4% and 0.2% respectively. The 12-month average hit a new record low since our records began in 1995.

In January, UK retail sales were flat on a like-for-like basis from January 2019, when they had increased 1.8% from the preceding year.

“January saw a return to growth, however recent political uncertainty and a decade of austerity appear to have ingrained a more thrifty approach to shopping among consumers. Furthermore, as sustainability continues to rise up the agenda, many customers are switching to more environmentally friendly products or simply choosing to buy less. These effects are not just limited to the high street as growth in online purchases also slowed.

Across the UK, retailers are facing tighter margins as a result of weak consumer demand and increasing costs, including sky-high business rates. We need to see a commitment from Government to bring down the overall burden of business rates in its upcoming review. In the short term, a move in the Budget to address Transitional Relief, which has seen retailers subsidising other industries by almost £500m since 2017 would prevent further shops closing and save jobs.” (Helen Dickinson OBE, Chief Executive British Retail Consortium)

Over the three months to January, Food sales decreased 0.1% on a like-for-like basis and increased 0.6% on a total basis. This is below the 12-month Total average growth of 1.2%, the lowest since February 2017.

In the same three month period leading to January non-food retail sales in the UK decreased by 1.5% on a like-for-like and 1.3% on a Total basis. This is in line with the 12-month Total average. For the month of January, Non-Food was in slight growth year-on-year.

“January is usually a quieter month for retail, and although static sales might not appear triumphant, at least it is no further deterioration.

Consumer confidence has started to return post-General Election, but we have not experienced any major leaps for the sector yet. We have to remember, this semi-positive performance will also be the result of aggressive discounts and consumers’ preoccupation with bagging a bargain. That’s not always good news when looking at bottom-lines.

Health-focussed categories did benefit from consumers aiming to start the year with good intentions. Meanwhile, grocery sales – while still growing – were noticeably muted. This continues a trend we observed at the end of 2019, which could indicate more significant structural changes to the sector. Equally, online sales have also started 2020 with moderate growth.

With Brexit ‘technically’ behind us, retailers will be hoping that consumers feel confident enough to reengage. But much remains unknown as we work towards defining our future relationship with the EU. Retailers are walking a tightrope between navigating any impact on their industry alongside ongoing changes in consumer behaviour.” (Paul Martin, Partner, UK Head of Retail KPMG)

Again over the same period in-store sales of Non-Food items declined 3.0% on a Total and 3.3% on a like-for-like basis. This is slightly better than the 12-month Total average decline of 3.1%.

Online Non-Food sales increased by 2.5% in January, against a growth of 5.4% in January 2019. This is lower than the 3m and 12m averages of 2.6% and 3.1% respectively.  Non-Food Online penetration rate increased from 29.5% in January 2019 to 30.6%.

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