Retail revival 'illusory' after disappointing February, says BRC/KPMG

By Matthew Chapman, marketingmagazine.co.uk, Tuesday, 06 March 2012 05:00PM

The British Retail Consortium (BRC) believes a retail revival remains "illusory" after sales dropped in February compared to last year, according to the BRC/KPMG Retail Sales Monitor.

Non-food performed badly during snow-hit February despite continuing promotions and discounts, contributing to UK retail sales dipping 0.3% on a like-for-like basis from February 2011, according to the report.

Total sales, which take into account expanded store space and new store openings, rose 2.3% against a 1.1% increase in February 2011.

Stephen Robertson, director general of the BRC, said: "The reality of weak sales shows that a convincing revival remains illusory.

"Unemployment is expected to rise further causing increased nervousness about job security, which is keeping confidence fragile.

"Total sales growth is still below inflation, so overall customers are actually buying less than a year ago, while discounts are eating into margins."

Robertson's comments come the day before (6 March) John Lewis announces its results, with analysts predicting its profits could take another big hit due to it having to match heavy discounting of rivals as part of its 'Never Knowingly Undersold' pledge.

Food sales picked up last month, which the report attributes to people stocking up in the very cold weather.

Citigate Dewe Rogerson forecasts grocer Morrisons will report a 6% year-on-year rise in profit-before-tax to £921m when it announces its results on Thursday, in line with consensus.

Morrisons is expected to indicate heavy investment in its stores and staff in order to combat the investment currently being made by Tesco, while it is a forecast a proportion of its investment budget will be directed at lowering prices further.

Helen Dickinson, head of retail at KPMG, said: "There are retailers out there who deliver what the customer wants and needs – in terms of product, brand and price – which proves that if the proposition is spot on it is still possible to outperform the market and the competition."

In terms of non-food, clothing, footwear and homewares were hit particularly hard in February, with home accessories showing their largest year-on-year fall since May 2008.

Follow Matthew Chapman at @mattchapmanUK

This article was first published on marketingmagazine.co.uk