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Sharp fall in retail sales last month

Retail sales volume fell by 1.9% between January and February . On a year-on-year basis sales grew by 0.4% but this was the slowest pace of growth for 14 years. There was a mixed picture depending on the type of shop. For example, over the past 12 months non-specialist stores showed a decrease of 5.2% but shops that were predominantly food stores only fell by 0.6%.

 

Between January and February the fashion industry took the biggest hit with falls in the sales of textiles, clothing and footwear falling by 3.7% over the month. The recent trend in retail sales can be seen in the figure below.

 

Volume of retail sales, all retailers, seasonally adjusted.  Source: ONS

Volume of retail sales, all retailers, seasonally adjusted. Source: ONS

 

The fall in the figures associated with the fashion sector were emphasised by some recent trading results which have just been published. For example, whilst Next saw an increase in sales of 11% in their last trading year, their profits were down 75%; JJB sports saw their sales fall by 6%; and, Moss Bros saw no change in sales and a £9m fall in profits.

 

When looking at the size of stores, the ONS has produced some very interesting figures. Retailers with over 100 staff actually saw their sales increase by 0.8% in February compared with a year earlier. However, the next grouping down which employed between 70 and 99 employees saw sales fall by 18.6%. Obviously, the very large supermarket companies with employment in the tens of thousands are doing very well but the mid-size groups are finding it much more difficult. By contrast, those employing between 10 and 39 staff saw sales drop by 6.5%.

 

The sales volume figures were below forecast and very disappointing , particularly following the decent sales over Christmas and the New Year. Why did retails sales fall?  This was particularly due to the difficult trading conditions. The fall in the housing market has hit furniture and do-it-yourself stores, with B&Q posting a 75% drop in profits. Otherwise, increased unemployment and gathering uncertainty have created more caution such that households are concentrating spending on what they really must buy. This is why the large food retailers are still holding up well.

 

Oh, yes. One of the other major reasons for the fall in retail sales volume last month was all that snow that fell. It might have looked like Christmas but many people could just not get to the shops.

 

 

 

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Posted in Consumer Expenditure, Retailing

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