More signs of growth as January retail sales rise at strongest rate in four years

More good news for retailers as the BRC-KPMG Retail Sales Monitor report like-for-like retail sales as having risen 3.9% in January as total sales surged by 5.4% – the strongest sales growth recorded in the UK since March 2010.

Non-food sales rose by 4% like-for-like from November to January, and furniture was the best performing category – exhibiting it’s best growth figures since April 2006. Home accessory sales also increased and this has given rise to speculation that the housing market might be on the road to recovery as well.

Fashion and footwear also performed strongly whilst book retailers achieved their best performance since June 2012 months.

However, it’s not all good news as the BRC warn that these  figures are being compared against soft comparatives and that February’s like-for-likes may not be so encouraging, in what is traditionally a hard month for retail sales.

Also in the report –  computer sales appear to be levellingoff, as tablet sales continue to rise strongly.

Helen Dickinson, BRC director general elaborates:

“Our figures for January show strong growth but a story of two halves. With a record number of people now in work and the continued recovery in the housing market we have seen very strong performances in furniture and other non-food items.

“These figures are better than expected given the continued squeeze on personal finances but official figures show that this is not built on personal debt which remains below pre-recession levels.

“Customers responded enthusiastically to a range of sales and promotions on non-food items this January. Retailers succeeded in tempting shoppers in with promotions, they also saw strong demand across new ranges, helped by improvements in consumer confidence. This was not the case in food which in contrast saw very low levels of growth in the last quarter.”

KPMG head of retail David McCorquodale concurs that the figures do mark a strong start to the year for retailers, but that they should still exercise caution:

“Most will take much from the positives and see genuine light at the end of the tunnel.

“However, behind the scenes some have had to discount heavily to secure these sales and will now be counting the cost of this strategy. Others have genuinely beaten expectations.

“Other than the grocers, retailers will feel heartened by these post-Christmas figures.  The divide between food and non-food is stark, with the battle for market share in food remaining ferocious, customer loyalty fickle and cost deflation being passed through to the consumer.

“In non-food, there were a number of factors at play, all of which helped to boost sales.  The weather in January 2014 was wet and windy but not, from a retail point of view, disruptive, snowy and cold like last year.

“A strong performance in furniture, flooring and home accessories hints that the recovery in house prices is having a positive knock on effect.

“The early weeks of the month reflected strong growth in clothing and other non-food, hinting that post-Christmas Sales campaigns had boosted the top line: only time will tell at what cost to the bottom line.”

So it’s still a case for quiet optimism for retailers – we suggest they should proceed with caution, learning from other businesses like Woolworths that have fallen by the wayside in the current economy.  Retailers should ensure that they have a strong retail strategy in place which prepares them for all outcomes, coupled with a sturdy multichannel retail proposition to make certain that all of their bases are covered as we move into the next quarter.