Apparently it’s not all doom and gloom this week. Following a post-Brexit slump in consumer confidence which caused a corresponding slump in like-for-like sales, BRC-KPMG sales monitor report that sales have rebounded during July. Indications are that this heightened performance was driven by elements of retail strategy and promotional activity across the retail sales industry during this period.
In the first full month since the EU referendum result, like-for-like retail sales jumped by 1.1% and total sales climbed 1.9% – their strongest performance since January. These new figures are prompting a new air of hope for retailers in the wake of Brexit and it’s knock-on economic effects. According to BRC-KPMG sales monitor, during the last three month period, to July 30th, total sales were up 1.1% – driven by a 1.4% uplift in non-food sales.
The best selling products were watches, jewellery and household appliances. These all sold well on both a like-for-like and total sales basis during the past month.
Fashion was hit hard during the Brexit period with several months of faltering sales. The industry now appears to be making a recovery, but some commentators have expressed concerns that the rise in sales is due to very heavy discounting of products within this sector and might not be sustainable going forward.
Promotion-driven retail strategy
Speaking to Retail Week about these latest figures, Helen Dickinson, Chief Executive of BRC suggested that the continued heavy use of discounting to boost sales presented a challenge to retailers to continue to flourish when not in a Sale periods:
“The big question for retailers is whether that success can be carried forward into full-price sales… whilst retailers continue to monitor the situation in the wake of Brexit, responding to rapid and complex change in consumer behaviour in the midst of a highly competitive market remains the substantive challenge.”
Food sales rise
According to the report, last month’s warm weather also prompted increased sales in certain food sectors – including picnic goods and soft fruits – causing food sales to rise overall by 0.8% over the three month period – the best performance for food sales since November 2013, excluding Easter distortions.
Joanne Denney-French, Chief Executive at IGD, suggest that these figures are very encouraging:
“Given the sharp drop in food and drink spending in the immediate aftermath of the referendum, a return to sales growth during July was very encouraging. The next few months’ sales figures will hinge largely on whether we see the return of food inflation, following the drop in sterling. If so, this is likely to be a gradual effect.”
David McCorquodale, Head of Retail at KPMG, suggests how retailers can continue to remain confident by planning to weather the storm:
“This first full month of retail sales figures post-vote suggests that UK shopping patterns haven’t changed versus previous years.
“For retailers, plans to improve productivity remain top of mind to guard against recent increases to their cost base as well as making sure they can weather what are likely to be more uncertain times ahead.”
By planning effective promotion and retail strategies and remaining flexible in the face of uncertainty, retailers can hope to improve sales and continue to succeed as the economy recovers from our most recent round of political shocks.