Retail sales slow in January on weak demand: BRC

Retail sales increased by 1.2 per cent year on year in January, against a growth of 4.2 per cent in January last year, industry figures have showed.

The metric was below the three-month average growth of 1.9 per cent and below the 12-month average growth of 3.4 per cent, according to the latest report by the British Retail Consortium (BRC), covering the four weeks to 27 January.

Food sales increased 6.3 per cent year on year over the three months to January, against a growth of 8.0 per cent in January 2023. For the month of January, food was in growth year-on-year.

Non-food sales decreased 1.8 per cent year on year over the three-months to January, against a growth of 2.9 per cent in January 2023. This is steeper than the 12-month average decline of 0.5 per cent. For the month of January, non-food was in decline year-on-year.

Over the three months to January, in-store non-food sales decreased 1.5 per cent year on year, against a growth of 7.2 per cent in January 2023. This is below the 12-month average growth of 0.8 per cent.

Online retailers saw yet another month of negative sales performance, with online non-food sales decreasing by 4.2 per cent year on year in January, against a decline of 4.1 per cent in January 2023.

“Easing inflation and weak consumer demand led retail sales growth to slow. While the January sales helped to boost spending in the first two weeks, this did not sustain throughout the month,” commented Helen Dickinson, BRC chief executive.

“Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year. The milder temperatures meant clothing sales performed poorly, particularly winter clothing and footwear. It was better news for health and beauty products, which continued to sell extremely well.”

Linda Ellett, UK head of consumer markets, leisure and retail, KPMG, said the trading environment remains difficult for retailers, with significant downward pressures on demand, a strong promotional environment and uncertainty hitting supply chains due to rising geopolitical tensions.

“Retailers will be hoping that continued good news on the economy, coupled with the small boost given to some consumers as cuts in national insurance start to feed through to pay packets, will boost confidence and convert to sales,” Ellett commented.

“With increases in labour costs and business rates around the corner, retailers will be hoping for good news in the chancellors’ upcoming Budget to give consumers that lift they need to start spending again.”

Commenting on the food and drink sector performance, Sarah Bradbury, IGD chief executive, said: “The year has started on a positive note. Despite most of the country bracing arctic conditions in the early part of January, grocery volumes have seen their largest year-on-year growth in over 12 months. This should, however, be viewed in the context of the market having endured a prolonged period of significant volume declines. Grocery sales remain in year-on-year growth, and with inflation slowing and further price cuts across the market, the rate of growth has remained relatively stable for the past three months.

“We can see that households have had to be mindful with their spending in January. Nearly a third of households with children at home claimed to have bought on credit over Christmas, so some households – particularly less affluent ones – will likely cut back a little to pay off this festive spending. While wage growth is now ahead of inflation, it will be some time before real incomes recover to their pre-crisis levels and consumer spending fully recovers.”