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Early Easter, weather and household budgets combine to hit retail sales

Retail sales experienced the largest drop in more than two decades in April as an early Easter, bad weather and squeezed household budgets combined to keep shoppers away.

According to the British Retail Consortium/KPMG Sales Monitor for 1-28 April, UK retail sales decreased by 4.2% on a like-for-like basis from April 2017, when sales had increased 5.6% from the preceding year.

On a total basis, sales declined 3.1% in April, against an increase of 6.3% in April 2017, both distorted by the timing of Easter. This is below the three-month and 12-month averages of 0.4% and 1.2% respectively and the sharpest decline recorded by the survey since its inception in January 1995.

Over the three months to April, in-store sales of non-food items declined 3.8% on a total basis and 4.9% on a like-for-like basis. This set a record low since this measure began in January 2013. On a 12-month basis, the total decline was 2.9%, another record low.

Over the three months to April, food sales increased 1.7% on a like-for-like basis and 3% on a total basis. This is below the 12-month total average growth of 3.5%, suggesting growth has peaked, since inflation started to recede.

Over the three-months to April, non-food retail sales in the UK decreased 2.4% on a like-for-like basis and 1.6% on a total basis, the lowest since March 2009. This is below the 12-month total average decrease of 0.6%, itself the lowest since September 2009.

In the latest evidence of the slowdown in the economy since the turn of the year, the latest health check from the British Retail Consortium (BRC) and KPMG found that sales were down by 3.1% in April, the biggest decline since the survey was launched in 1995.

‘With much of the spending in preparation for the Bank Holiday weekend falling in March this year, a record low in sales growth, in contrast to last year’s record high, does not come as a surprise. However, even once we take account of these seasonal distortions, the underlying trend in sales growth is heading downwards,’ said Helen Dickinson, BRC chief executive.

‘The first glimpse of summer may have temporarily lifted clothing and footwear, but non-food sales overall continue to be weak. Consumers’ discretionary spending power remains under pressure and the reality is, that with only a gradual return to solid growth in real incomes expected, the market environment is likely to remain extremely challenging for most retailers.’

‘April’s figures show retail sales growth falling off a cliff, but we must exercise caution and remember that the timing of Easter makes meaningful month-on-month comparisons difficult,’ said Paul Martin, KPMG head of retail. ‘ That said, the three-month average is more helpful to assess, but this too points to sales only growing modestly – these are indeed testing times for retailers.

‘Retailers have got their work cut out to overcome seemingly endless obstacles, whether it be unpredictable weather or the introduction of new regulation, like GDPR. The upcoming months will provide a number of opportunities for retailers to drive sales and navigate this assault course, including Bank Holidays, the World Cup and of course the royal wedding, although it is clear that trading will remain challenging.’