MNI DATA: January Discounts Lift Sales To False Dawn: KPMG-BRC

--UK Jan Total Retail Sales 2.2% Y/Y Vs Dec 0.0%

By Jai Lakhani

     LONDON (MNI) - The pace of UK consumer spending rebounded in January after

the weakest Christmas in ten years, a survey published Tuesday showed.

     The British Retail Consortium Retail Sales Monitor reported January

like-for-like sales up 1.8% on the year. The reading rose by 0.6% y/y in January

2018.  

     Total shop sales were up 2.2% in January, up by the same amount from

December's reading and the highest y/y rate since June. As a result, the 2.2%

reading was above the 3-month and 12-month averages of 0.8% and 1.2%

respectively. 

     --A BRIGHT START TO 2019

     The data suggested that whilst there was a rebound from December's data, it

appeared to stem from strong discounting as opposed to inherent willingness and

ability of households to spend. 

     "There was a welcome return to growth this month after December's

disappointing sales figures. But while retail discounts helped tempt cautious

consumers, there is no guarantee this momentum will continue after the sales

have finished," Helen Dickinson OBE, Chief Executive, British Retail Consortium

said. 

     However, the increasingly popular online segment of sales moderated in

January with online sales of non-food products growing 5.4%. Whilst the total

reading was above the 3-month average of 4.8%, it was below the 12-month average

of 7.0%.

     "But while retail discounts helped tempt consumers, there is no guarantee

this momentum will continue after the sales have finished. And it will not just

be brick-and-mortar stores looking nervously to the future, as online sales

continued to grow below the long term trend," Dickinson added. 

     --FOOD, FURNITURE WINNERS

     Electronic items didn't make it three in a row at the top of consumers want

list in January, as furniture topped the list. 

     "The colder weather and continual discounting drove up fashion sales,

whilst the increased focus indoors also boosted furniture sales. However, not

all categories or players have been so fortunate, and even online growth

continued to slow," said Paul Martin, UK Head of Retail at KPMG. 

     Food sales were directly behind furniture with growth over the three months

to January of 1.3% like-for-like and 2.4% on a total basis, the highest since

September. Nonetheless, it is still below the 12-month total average growth of

3.0%, which is the lowest 12-month average since September 2017. 

     "Bolstered by the inclusion of New Year's Eve in the latest figures and

relatively mild weather before the recent snowfall, food and grocery sales held

up reasonably well in January," said Susan Barratt, CEO at IGD. 

     --JANUARY IMPROVEMENT COULD BE SHORT LIVED

     The warnings of a disruptive no-deal Brexit continues to be a factor in the

outlook for 2019 sales and could "reverse" the January fortunes. "Unless the

Government wants to see well-known brands disappearing from our high streets in

2019, they should work with their colleagues in Parliament to find a solution,"

warned Helen Dickson. 

     Further to this, Martin noted the fact the January pointed more to "British

shoppers' obsession of bagging a bargain and price inflation, rather than any

real improvement, and these peaks and troughs continue to leave retailers

feeling increasingly anxious." 

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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