UK consumers cut back on spending in January says BRC-KPMG Retail Sales Monitor

British consumers cut down on spending in January, according to the BRC – KPMG Retail Sales Monitor published on Tuesday (7 February).

The report showed that sales had decreased by 0.6% year-on-year in the first month of 2017. This was on a like-for-like basis and excludes new store openings. This reading was much lower than the 2.6% growth witnessed in 2016.

Overall, a marginal growth of 0.1% was seen in January retail sales, which is much lower than the 3.3% increase of January 2016. It was also lower than the three-month average of 1.1% and the 12-month average of 0.9%.

Commenting on the decline in spending, BRC CEO Helen Dickinson Obe said in a statement, "After a strong end to the Christmas trading, year on year sales growth ground to a halt, compensated only by stronger furniture sales and a boost for some retailers from Chinese New Year. While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January."

One of the highlights of the report was that consumers had cut down spending on non-essential items while continued to spend on food.

Over the three-months to January, sales across the food category grew 0.6% on a like-for-like basis and by 2% on a total basis. The latter was more than the 12-month average of 1% and marked the second consecutive three-month average growth of 2% or more.

On the other hand, sales from non-food items over the three-months to January increased by 0.2% on a like-for-like basis. On a total basis, this category grew by 0.3%. This was not only below the 12-month average growth of 0.8%, but also marked the lowest reading since July 2012.

With regards to non-food sales, Dickinson Obe said, "Looking across the last three months, we've seen the slowest growth of the festive period since 2009. Closer inspection reveals that this was driven by slowing sales in non-food sectors."

Further, online sales grew by 8.6% over the three-months to January, which was much better than the in-store sales which declined 2.2% on a total basis.

In a separate statement BRC said that online sales of non-food products grew 8% year-on-year in January. However, this was lower than the 14.9% growth witnessed in January 2016. It was also found to be lower than the three-month average of 8.6% and the 12-month average of 9.5%.

The report further said that online sales represented 22.9% of total non-food sales in the UK in January 2017.