Recovery hopes premature, says BRC
Published: 8 September 2009
"Deceptively good sales" in summer months are not indicative of a growth in consumer confidence as retail sales fall again in August.
UK retail sales values fell 0.1% on a like-for-like basis from August 2008, when, said the British Retail Consortium, sales had already fallen as a result of wet weather. On a total basis, sales rose 2.2% against a 1.4% gain in August 2008.
According to the BRC-KPMG Sales Monitor for August, homewares and furniture sales fell back below year-earlier levels after July's growth, which had been driven by good weather and heavy discounting.
Mail order and the internet also saw their weakest growth since May, with non-food, non-store sales just 7.9% higher than a year ago - well down on the 20% reported in July and 16.8% in June.
BRC director general Stephen Robertson said: "The stronger figures of June and July haven't been sustained. It's clear that deceptively good sales growth of those months was due to summer sun and price cuts - not any major revival in how customers are feeling. What spending we now have is all about value and essentials."
He added: "Most people are still very reluctant to spend on expensive household items - unless they're sufficiently discounted. As we head into autumn, we mustn't make too much of any positive sales growth because the comparison will be with very weak figures a year ago when total sales growth dipped below zero."
BRC head of non-store retailing Sharon Hardiman explained that customers are "pulling back" and that, although non-store sales of non-food products continue to outperform instore sales, "they are not immune from the impact of the recession on customers' ability and willingness to spend."
In a more in-depth look, the Sales Monitor also revealed that, in the electrical sector, consumers remained cautious and actively sought out good deals, especially for big-ticket items. Signs of improvement in the housing market helped boost confidence, with white goods, particularly laundry and refrigeration showing some growth.
Good weather boosted sales of gardening and outdoor DIY, showing some growth against last August's rain-hit trade. Plants, garden care and tools benefited, while indoor DIY continued to profit from the 'don't move, improve' trend.
Home accessories and house textiles sales both fell back below year-earlier levels after July's clearance-driven growth. Continued pressure on household budgets also meant that practical items, such as cookware, sold better than more discretionary items.
Sales of furniture and floorcoverings dropped back to show a notable year-on-year decline, against what was already a steep fall in August 2008. The Sales Monitor reported that, although some saw improved demand for new ranges, underlying trade remained tough. Fitted kitchens, bedroom furniture and upholstery also performed better than dining and garden furniture for the month.