The latest research and analysis from the BRC

The latest research and analysis from the BRC


The British Retail Consortium produces unbiased research and analysis on retail performance and the economic drivers influencing the British retail industry. The MIA’s Membership with the BRC gives us access to an expanded portfolio of content to share with our members.

We’re pleased to share the headline statistics from these reports on retail sales, inflation and footfall.

“Sales Growth slows as storm clouds gather”

OVERVIEW

February saw a significant slowdown in sales from the previous month, with Total growth of 6.7% on a Year-on-year basis. The arrival of storms Eunice and Franklin at the end of the penultimate week of the month dampened demand over that weekend, unsurprisingly, which in turn hampered Total spending levels for February. Another headwind for consumer spending that appears to be building up is that of inflation, which is set to rise even further in April thanks to the increase in the energy price cap. This was starting to play on shoppers’ minds in February, causing many to tighten their belts and be more discerning when deciding to make discretionary purchases.

When it came to the split between Food and Non-Food spending, in February a similar trajectory was seen as in recent months, with the latter far outpacing the former. In the three months to February, Food sales were broadly flat when compared to the same period last year, with only 0.1% growth on a Total basis. However, when looking back to before the coronavirus crisis began, spending on Groceries in still significantly higher now, as many continue to be reluctant to visit pubs and restaurants as frequently nowadays and large portions of the workforce continue to work from home.

On the Non-Food side of consumer spending, Fashion related products were the standout performers of the month. In comparison to the same point last year, naturally the reopened stores made the biggest difference to their demand, as the opportunity to try before you buy remains a strong aid to sales. Another contributing factor during the month was the final relaxation of covid-related restrictions, which had a knock-on effect for people to move back towards more office-based working, leading many to update their office attire. However, the ongoing stock fulfilment problems for many retailers showed little sign of abating in February, which is leading to phasing issues for Clothing & Footwear in particular, due to the seasonal nature of their sales patterns. When comparing sales to their pre-pandemic levels, Household goods continued to perform well in February, with larger items selling well due to the prevalence of interest free finance options offering protection from price inflation.

Helen Dickinson OBE, Chief Executive, British Retail Consortium:
February saw continued sales growth, although dampened by Storm Eunice and falling consumer confidence. Traditional try-before-you-buy products, like furniture and home accessories, as well as fashion and jewellery, continued to be the highflyers as more people returned to stores. While online sales remained down on last year, the new spending habits driven by the pandemic have settled into a new normal, particularly for non-food, with four in every ten pounds now spent online compared to three in every ten before the pandemic. Retail has driven five years’ of digital transformation in 24 tumultuous months.
The future is looking increasingly uncertain, with current demand unlikely to be sustained. Consumer confidence, falling in recent months, will likely tumble further against the backdrop of the current geopolitical events. The cost of living will continue to spiral due to global inflation, increasing energy bills and the rise in national insurance this Spring. With households facing lower disposable income, discretionary spend will be one of the first things to feel the squeeze.

“Inflation continues to rise”

OVERVIEW
  • Shop Price annual inflation accelerated to 1.8% in February, up from 1.5% in January. This is above the 12- and 6-month average price decrease of 0.3% and increase of 5%, respectively. This marks the highest rate of inflation since November 2011.
  • Non-Food inflation accelerated to 1.3% in February, up from 0.9% in January. This is above the 12- and 6-month average price decreases of 0.9% and 0.1%, respectively. This marks the highest rate of inflation since September 2011.
  • Food inflation remained unchanged at 2.7% in February. This remains above the 12- and 6-month average price growth rates of 0.7% and 1.6%, respectively. This is the highest inflation rate since September 2013.
  • Fresh Food inflation accelerated in February to 3.3%, up from 2.9% in January. This is above the 12- and 6-month average price growth rates of 0.4% and 1.7%, respectively. This is the highest inflation rate since March 2013.
  • Ambient Food inflation slowed to 2.0% in February, down from 2.4% in January. This is above the 12- and 6-month average price increases of 1.1% and 1.4%, respectively.
Helen Dickinson OBE, Chief Executive, British Retail Consortium:
Retail prices rose in February at their fastest rate in over a decade. Food inflation remained the key driver behind higher prices, particularly for fresh food which has been impacted by poor harvests, both in the UK and globally. Meanwhile, the increase from last month is a result of rising prices for non-food products, particularly health, beauty and furniture. There is little sign of change, with the Bank of England predicting price rises to continue until at least the Spring.
Price rises will be unwelcome news for households who already face falling disposable income because of the rise in national insurance and energy price caps. Retailers continue to face cost pressures from higher shipping rates, with crude oil prices having almost doubled over the last year. Other pressures include labour shortages, commodity price increases, and rising energy prices. Retailers are going to great lengths to mitigate against these price rises and support their customers, for example, many supermarkets have expanded their value ranges for food. Unfortunately, there are limits to the costs that retailers can absorb.

“Storm Eunice fails to dampen Footfall”

OVERVIEW

The UK’s retail Footfall levels took a stronger step in the right direction in February, following last month’s slowdown. Bolstered by the easing of restrictions, total UK footfall reported the highest number of shopper counts seen since pre-pandemic levels in the last week of the month.

Helen Dickinson OBE, Chief Executive, British Retail Consortium:

UK footfall led the major European economies in February, as the steady return to the office increased shopper numbers in many towns and city centres. A promising start to the month was briefly dampened by Storm Eunice, before bouncing back in the final week of February, to its highest level since the pandemic began. This coincided with the easing of Covid restrictions in England. Overall, the major cities enjoyed the biggest improvements, particularly London, Manchester, and Birmingham”

“Retailers, large and small, will welcome the return of customers to their stores – a sign their innovation and investment in their physical and digital offerings is working. However, challenges remain; consumer confidence has been greatly impacted by rising inflation, while the return of hospitality and tourism will create additional competition. Retailers will need to continue the momentum to keep consumers engaged.

As a member of the BRC, the MIA can share the full reports with our members. If you would like to see any of these 4 reports in full, please contact alice@mia.org.uk

Want to Join the Music Industries Association?

Join now

Already a member?

Sign in