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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 08 February, 2018

Food boosts January sales growth

Figures from the British Retail Consortium show like-for-like retail sales grew 0.6% in January, despite a 3.6% drop in non-food sales, as the performance of food and non-food sales becomes ever-more polarised. Rising food prices continue to inflate sales growth and absorb an increasing amount of shoppers’ squeezed budgets. With the exception of clothing, sales of non-food items struggled in January, dragging the 12 month average into negative territory for the first time in nine years. However, any growth in overall retail sales in the current environment must be viewed as a positive for UK Retail.

There was also a marginal rebounding of consumer confidence in January, according to the GfK measure, although the Index remains lower than this time last year, and is still in negative territory. While welcome news, it is debatable whether this signals a long-term recovery in confidence for the UK consumer. There remains a great deal of economic uncertainty, and with inflation high and income constrained, we do not expect the underlying factors behind the current ‘consumer squeeze’ to ease in the short-term.

The challenging conditions, particularly in the fashion sector, were underlined by New Look’s results this week. Group revenue fell 6.3% year-on-year in the 39 weeks to December 23, exacerbated by a 10.7% slump in UK like-for-like sales. While not unexpected, the results highlight the job in store for New Look, as it battles an over-sized and ageing store portfolio and a saturated youth fashion market.

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