Retail sales figures a mixed bag – KPMG

A LEADING retail analyst at accountancy and advisory firm KPMG suggests the latest retail figures may not be as bleak as first suspected.

Office of National Statistics (ONS) figures released on Friday show UK retail sales fell unexpectedly in January.

Volumes fell 0.6% from December 2012, hurt by heavy snowfall. Volumes also fell 0.6% from a year ago, the first annual fall in 17 months.

The ONS highlighted weak sales in the food sector, which dropped 2.6% year-on-year to the lowest level since April 2004. It also said small stores had fared worse than large stores.

But Simon Purkess, head of retail at KPMG in the Midlands, belives the headlines don’t tell the whole story.

“While the ONS statistics paint a negative picture, my sense is that January was in fact a relatively flat month,” he said. 

“If you strip out sales of petrol, sales volumes rose marginally by 0.2% and values increased by 1.6%, which was slightly behind inflation. This appears to hint at continued margin pressure in the retail sector with goods being discounted to shift volumes. 

“Interestingly, for those retailers selling winter and outer wear, the snow perhaps came fractionally too late. Retailers had already launched their seasonal sales and slashed the prices of winter gear when customer demand for cold weather clothing drove up volumes.

“I am surprised to see the trend away from smaller retailers during the week of snow.  A layer of snow normally drives consumers to local convenience stores, but it appears that the online grocers have picked up this volume, rather than the local convenience store.

“Generally speaking though, I still maintain that, despite the collapse of some High Street names in January, the larger retailers will be satisfied that their seasonal campaigns were successful. They are now dealing with much choppier waters in the food sector, which will have longer term ramifications for the industry.”