Retail hit by wettest February on record

Adverse weather conditions in February cast a shadow over the UK retail sector, with sales figures, unadjusted for inflation, suggesting a potential concealed decline in volumes amid heightened inflation, according to data released by the BRC-KPMG Retail Sales Monitor.

The 1.1 percent year-on-year rise in total retail sales fell below the 3-month and 12-month averages, indicative of a subdued market. While food sales showed a 6.0 percent year-on-year increase over three months, the 2.5 percent decline in non-food sales, particularly in-store non-food sales -2.3 percent year on year, and a significant 4.1 percent decrease in online non-food sales, painted a challenging picture. The online penetration rate dropped to 35.7 percent, reflecting shifting consumer trends.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said February's record-breaking rainfall dampened consumer demand. Despite Valentine's Day, certain product categories like jewellery and watches struggled. Dickinson urged government intervention to boost the economy, given imminent cost challenges for retailers. “Retailers have some Government induced cost hurdles to jump in the coming months including a 400 million pounds business rates rise based on last September’s 6.7 percent inflation rate,” Dickinson said. “By using Wednesday’s Budget to reduce this, the Chancellor will lend a helping hand to much needed investment in businesses and local communities up and down the country.”

Linda Ellett, UK Head of Consumer Markets, Leisure & Retail at KPMG, highlighted the modest 1.1 percent retail sales growth amidst national insurance rate cuts. Thriving health and beauty categories provided a silver lining, while unexpected spikes in home and dining accessory sales hinted at evolving consumer preferences. Ellett acknowledged consumer hesitancy amid rising essential costs.

“With big increases in labour costs and business rates just weeks away, adding to an already stressed cost agenda for retailers, many will be pinning their hopes on some good news in the Chancellors’ Spring Budget this week to help kick start a spending revival on the high street. As inflation continues to slow over the coming months and household finances are expected to improve, there is some light at the end of the tunnel for weary households. However, the assumption that having more spending power will lead to more spending isn’t cutting through at the moment, and retailers will continue to face significant downward pressures on demand in the months to come.“