UK retailers demand Brexit deal after worst September on record
Retailers have urged the government to secure a Brexit deal with the European Union after their latest health check of high street and online spending showed the worst September performance since the survey was launched in the mid-1990s.
The British Retail Consortium – the trade body for stores and digital suppliers of consumer goods – reported a 1.3% drop in sales in September over the same period last year, setting a new record low for that month. It also meant average growth over the previous 12 months of just 0.2%, the lowest level since 1995.
Although wages are currently rising faster than prices, retailers said the BRC’s monthly survey showed that consumers were reluctant to part with their money at a time of heightened political and economic uncertainty.
The BRC said the slowdown in spending was evident in stores and online. It added that food sales had been holding up better than non-food spending.
Helen Dickinson, the BRC’s chief executive, said: “With the spectre of no deal weighing increasingly on consumer purchasing decisions, it is no surprise that sales growth has once again fallen into the red. Many consumers held off from non-essential purchases, or shopped around for the bigger discounts, while the new autumn clothing ranges suffered from the warmer September weather.
“The longer-term prospect continues to be bleak, with the 12-month average once again plumbing new depths at a mere 0.2%. Online non-food sales growth was the lowest on record, though still compared favourably to the decline in growth at physical stores.
“With four months of negative sales growth since March, the ongoing political gridlock surrounding Brexit is harming both consumers and retailers. Clarity is needed over our future trading relationship with our closest neighbours, and it is vitally important that Britain does not leave the EU without a deal.”
Paul Martin, the UK head of retail at KPMG, which partnered the BRC in compiling the survey, predicted a period of increased promotional activity to allow retailers to clear surplus stock. The need to cut prices to attract business did not bode well for retailers desperately trying to make up for lost ground after several difficult months.
“Retailers’ focus needs to be on cost and efficiency with only the leanest and most efficient operations coping with this extreme test of endurance,” he said.
However, official figures from the Office for National Statistics have been less downbeat than surveys from the BRC and the CBI.
Separate figures from Barclaycard, which handles almost half of all credit and debit card transactions as Britain’s biggest credit card provider, found that total spending rose modestly in the year to September.
Barclaycard said sales grew by about 1.6% compared with the same month last year, with essentials spending up slightly, while there was muted growth in spending in supermarkets. However, in a sign of the woes for the high street as consumers prioritise spending on essentials and experiences – such as cinema and theatre tickets – clothing sales dropped by 3.9% on the year. Spending on household goods – such as DIY, electronics and furniture – slumped by 1.2%.
Esme Harwood, director at Barclaycard, said some consumers were also starting to stockpile ahead of Brexit by bringing forward their Christmas shopping. She added: “Confidence remains low with consumers uncertain about the economic outlook.”
Several major retailers in Britain have reported that Brexit uncertainty has affected their customers, including supermarkets Asda and Morrisons, as well as Kingfisher, the owner of the B&Q home improvement chain.
However, clothing retailer Next blamed unusually warm weather at the start of autumn for a disappointing start to autumn trading.
Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics said: “September appears to have been a bad month for retailers, but we doubt that growth in households’ spending is fundamentally slowing.”