Department stores continue to suffer as retail sector remains sluggish
According to ONS data released today, the UK retail sector is continuing to struggle amidst political, economic and social issues causing unsure shoppers to hold on to their cash.
The month on month view has remained flat whilst the three-month view shows only minimal growth of 0.6%. Online sales, whilst still a healthy proportion of sales, has reduced slightly compared to last month and is now at 19.1%, dropping 0.4%. Whilst the comparison to last year is healthier with an increase of 3.1%, growth across the major categories of department stores and household goods have both declined.
It’s likely that the very real uncertainty about Brexit and what this will mean for the British people is the biggest cause of the stagnation as shoppers are reluctant to commit to purchases without knowing what the future hold
The food sector has had a surprising bounce in sales in September but many other areas, especially department stores, are having a really hard time weathering this uncertain period. Sales in the non-specialised stores category, which includes department stores, has seen the biggest decline in almost 10 years, dropping by an annual 2% across the third quarter. However, this category has also provided the largest contribution to growth in quantity bought during September at 1.4 percentage points, whilst food stores reported the largest amount spent (1.5 percentage points) in the same period.
We’re continuing to see a pretty volatile month on month view of quantity bought in retail sales, particularly when looking across the last three years. The heatwave-packed summer of 2018 cause a surge in sales but as we moved into the winter, growth once again slowed and has struggled to gain any real momentum in 2019.
The fuel category has consistently been the worst performer of all categories in 2019 and this continues into September; it is the largest negative contributor to the amount spend at -1.3 percentage points.
Once again, the ONS is presenting a slightly more positive view of the sector that the BRC and CBI, however all are unanimous in their view that the uncertainty around Brexit is now significantly impacting consumer spending. This is echoed by several major British retailers, including Asda, Morrisons and Kingfisher Group, however Next believes that a warmer start to autumn is also a key factor in a reluctance to maintain recent spending levels.
By the time the next ONS report is released, we’ll have greater clarity on what is actually happening with Brexit thanks to the current Government’s October 31st deadline. We will also be well on our way to Christmas. Although the report will be reflecting on October, it will be interesting to see what impact the knowledge of these two factors have on the state of the sector and in the public’s confidence in spending. I hope, for the sector as a whole, that it acts as the positive springboard it desperately needs.
Read the ONS Report for August
In what is becoming the defining narrative for retail in 2019, the ONS has today released statistics showing very slight growth in retail despite ongoing headlines of big-name retailers facing significant financial difficulties.
Share this Post