June retail sales rise thanks to non-food spending

UK retail sales increased in June by 1.2% on a like-for-like basis when compared with June 2016.

On a total basis, sales rose 2.0% in June, against a growth of 0.2% in June 2016. This month’s growth is below the 6-month and 12-month averages, both at 1.4%.

Other findings from the British Retail Consortium/KPMG research include: 

  • Over the three months to June, food sales increased 3.6% on a like-for-like basis and 4.7% on a total basis. This is the strongest 3-month average since February 2012, and pulls the 12-month total average growth to 2.5%, the highest since December 2013.
  • Over the three-months to June, non-food retail sales in the UK increased 0.9% on a like-for-like basis and increased 1.2% on a total basis, above the 12-month total average growth of 0.6%. This is the best 3-month average since December, and the first above 1.0% of the year so far.
  • Online sales of non-food products grew 10.1% in June, compared to 9% a year earlier. Over the three-months to June, online sales of non-food products grew 8.4% while in-store sales declined 0.7% on a total basis and 1.2% on a like-for-like basis, a better performance than the like-for-like 12-month average decline of 2%.

Garden centre June sales look to have been equal or slightly ahead of 2016, keeping year-to-date figures several per cent up on 2016.

British Retail Consortium chief executive Helen Dickinson said: "The arrival of summer provided a welcome pick-up to sales growth in June, particularly to non- food categories which saw a reversal in fortunes after a prolonged period of sluggish growth. Leisure pursuits and activities spurred consumer spending on summer clothing, beauty products and outdoor toys, which were also boosted by gift purchases over Eid.

"The six-month average, buoyed by June’s strong performance, now paints a slightly rosier picture for retail sales. But on closer inspection the year on year numbers belie the fact that rising food prices are responsible for the main component of growth and have prompted more cautious spending towards discretionary non-food items.

"Online continues to take the lion’s share of growth, although contribution from stores increased slightly in June as it seems shoppers headed out with specific purchases in mind, rather than just to browse.

"Looking ahead, there’s a question mark over whether this spending momentum will last, as household expenditure is increasingly squeezed from rising inflation and slowing wage growth. The reality is that retailers’ efforts in absorbing mounting cost pressures into their margins are already being tested, so the Government must have the consumer front of mind as it enters the UK’s trading negotiations with the EU, to avoid any further cost increases to retailers and their customers."

KPMG retail head Paul Martin said: "After a challenging month in May, retail performance in June appears to have rebounded both online and on the high street. However, whilst the sunshine may have prevailed this month, retailers would be wise to remain cautious.

"For fashion retailers the boost in sales could not have come soon enough. Following a challenging year so far, it appears the higher temperatures thankfully provided an increased interest in summer collections. Elsewhere, the sun also shone on health and beauty sales too, with the category continuing to be a top performer.

"Whilst the latest figures are definitely more favourable than last month’s, retailers must look at the bigger picture. Inflation and household debt are fuelling part of this retail growth, meanwhile the industry is undergoing significant structural changes more broadly. The retailers succeeding are those embracing change." 

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