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Jul 14, 2015
By Petah Marian
UK retail sales positively shone in June, boosted by a late-in-the-month run of warm weather that kicked-off (finally) demand for summerwear, even if so much of it was selling at a discount. The sales boom also heralded an early start to the seasonal clearance period, the latest British Retail Consortium (BRC) and KPMG figures showed Tuesday.
The BRC’s report follows figures from Visa that have pointed to the strongest quarter for consumer spending in five years.
Total spending in June rose 2.9% year-on-year, while same-store sales rose 1.8%, the strongest monthly rises since January 2014 (minus the Easter readings that always skew the figures). Online sales last month also leapt 17.6% year-on-year, significantly ahead of the 10.6% rise last June.
But before we get too excited, there are quite a few negativefactors to take into account. For a start, the latest gains were up against a pretty weak June 2014 when dull weather stifled apparel demand. Sales this time were also boosted by custommers clammering for outdoor toys as the best weather peaked.
Also, retailers had also slashed summerwear prices after a cooler May led to stores being left with unsold stock.
Despite the increases, comp sales remain 0.1% lower overall for the past three months, driven by supermarket price wars. But with food sales down 2.7% and non-food up 2.1%, at least that’s a bright spot for the fashion sector.
“We saw welcome signs of growing consumer confidence, with people more willing to ‘trade-up’ and spend a bit more on big-ticket purchases, likely boosted by the growth in the supply of credit and other factors such as low inflation and rising real incomes,” BRC director general Helen Dickinson said.
David McCorquodale, head of retail at KPMG, said: “After cooler May weather had dampened fashion sales, the glorious sunshine and some significant promotional activity this month lured consumers into a rush to update summer wardrobes.
“Men’s fashion and footwear sales were also given a particular boost as dads were treated to something special on Father’s Day.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The prospects for retail sales and consumer spending look bright for the rest of 2015 and beyond.
“Consumer confidence was at a 15-year high in June, inflation is negligible, earnings growth is improving and employment is high and rising.
“Additionally an expected pick-up in housing market activity should be supportive to consumer spending through boosting demand for household goods and furnishings.”
Low inflation and rising wages are also fuelling a spending spree, which is likely to have contributed to a much-improved economic output in the second quarter compared with the previous three months.
* UK inflation fell to zero in June, as stores began their summer sales and an ongoing supermarket price war continued to push down food prices. Price growth, as measured by the consumer prices index (CPI) stood at zero in June compared with a year ago, from 0.1% in May, according to the Office for National Statistics (ONS). The fall was expected by analysts and is also in line with forecasts produced by the Bank of England in its latest Inflation Report. The ONS said falls in clothing and food prices were the main factors, along with smaller rises in air fares than a year ago.
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