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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 13 November, 2017

Shoppers rein in spending in October

Retail sales growth slowed in October, as consumers cut back on non-food spending. On a like-for-like basis, sales were down 1%, according to The British Retail Consortium - total retail sales, including food, rose just 0.2%. Non-food items grew at the slowest pace since records began, as families shifted spend towards leisure activities. The trend was backed up by separate figures from Barclaycard, which showed households cut their spending on clothing by 4.1% last month, the biggest drop since March 2013, whereas spending in restaurants grew by 11.8%. A rise in interest rates, weak wage growth and continued inflationary pressures means consumers wallets will remain under pressure.

Marks and Spencer reported LFLs down 0.3% in the 26 weeks ending 30 September, as food sales faltered - M&S will open fewer Simply Food outlets than expected as a result. Like-for-like sales improved in M&S's clothing and homewares arm, down by 0.1% in its second quarter after a 1.2% fall in the previous three months. The result is reflective of the ongoing tough conditions in the midmarket fashion segment.

Strong results from some of the UK’s foremost fashion operators highlight the challenges facing the squeezed midmarket. Superdry’s global brand revenue (including wholesale) grew 25.2% in the half year to October 28, with UK sales up 10%. Burberry also saw double digit growth in its UK sales, as it benefitted from a boost in tourism sales. And Primark reported an increase in LFLs of 1% across the group but a 10% increase in total UK sales, as it continues to outperform the clothing market, and gain market share from midmarket and value competitors.

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