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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 16​​ October, 2017​​

Retail sales growth driven by inflation

UK retail sales rose 1.9% YoY in September on a like-for-like basis, according to the BRC - on a total basis, sales increased 2.3%. The rise in sales was mainly driven by price increases, particularly in food and clothing. In the quarter to September, food sales increased 2.5% on a like-for-like basis, while non-food retail sales increased 0.5% on a like-for-like basis. While consumers focused on essential spending in the month, such as winter coats and back to school items, pressures remain on non-essential, big-ticket items. Online sales rose above the 3-month and 12-month average, up 10.7% in September.

Despite the rise in retail sales, footfall in the UK declined in September, down 1.2% MoM overall, according to the BRC. High street footfall saw the sharpest decline, down 2.2% YoY, followed by shopping centres, down 1%. A decrease in footfall was recorded in every UK region except the East of England. The greatest decline was seen in Northern Ireland at 4.3%, followed by the South-west at 2.4%. However, retail parks saw footfall rise 1.1%, - slightly lower than August’s figures, but a rise compared with last year.

And finally, despite the headwinds and evolving retail market, responsive and adaptive retailers continue to drive LFL growth. Over the last week, Ted Baker announced a jump in sales, up 14% in the six weeks to August 12, helped by a 43.8% surge in online sales, while pre-tax profits rose to £25.3m. WH Smith recorded a 9% rise in sales in its travel shops in the year to August 31, helped by tourist spending on souvenirs and international growth. Its high street sales dropped 5%, while overall sales increased 2% to £1.2bn. UK sales at Inditex, owner of Zara and Massimo Dutti, rose 13% to £602.7m in the year to January 31. However, pre-tax profits for its UK arm dropped from £58.3m to £39.2m, due to one-off investment. LFLs at Dunelm rose 9.3% in the 13 weeks to June, while full-price sales at Matalan jumped 19.6% in the 13 weeks to August 26 and EBITDA rose 47.4%. Finally, sales at luxury group LVMH jumped 2% to €30.1bn in the first nine months of 2017, as sales of fashion and leather goods increased 13%.​

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