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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 12 September, 2017

​Retail sales pick up in August

Retail LFL sales rose 1.3% in August compared to a 0.9% drop in the same month last year, according to the BRC. Total sales rose 2.4% compared to last August’s 0.3% decline. The uplift was driven by Food (+1.8% LFLs), plus strong homeware sales and purchases for the new school term, such as children’s footwear and uniforms. While non-food LFL sales are starting to recover to levels seen two years ago, with 0.6% growth, they remain under pressure, as general consumer spending growth slows. According to Barclaycard, overall spending growth softened to 2.9% year on year in August (below the 2017 average of 3.8%) as consumers react to higher inflation and subdued wage growth.

BRC’s strong figures for food growth are largely the result of rising prices - growth in volume terms are actually weaker than last year. MySupermarket’s monthly Groceries Tracker show that the price of a food basket of 35 popular items were up 5p in August MoM, and was £1.05 more expensive than August 2016. In addition, the recent monthly BRC-Nielsen Shop Price Index saw overall food inflation up from 1.2% in July to 1.3% in August.

Away from the macro picture, several retailers have reported positive sales in the last week. Primark’s parent company Associated British Foods has reported LFL growth is expected to be 1% in the year to September 16, while total group sales are expected to jump 13% YoY. Revenues at Halfords rose 4.8% in the 20 weeks to August 18, boosted by the trend for ‘staycations’ – consumers taking their holiday in the UK due to the value of the pound against the Euro. And finally, LFLs at the award winning M Restaurants increased 9.3% in the nine months to August.​

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