TheRetailer_Summer_19

NEWS FROM THE BRC

TRENDS AND OUTLOOK FOR THE RETAIL SECTOR

kyle monk HEAD OF INSIGHTS AND ANALYTICs british Retail Consortium

FIGURE 4: SHOP PRICE INFLATION YoY (%)

Non-Food prices still deflationary July Shop Prices fell by 0.1%, the second consecutive month of deflation since October 2018. In July, as in June, the headline inflation figure was driven by the sharp decline in Non-Food prices. There are signs that inflationary pressures are receding: July’s inflation for all Food and Non-Food categories was below the 6 and 12 month average price increase for most categories.

4.0%

2.0%

0.0%

-2.0%

-4.0%

% change year-on-year

Jul-14

Jul-17

Jul-19

Jul-15 All Items

Jul-16

Apr-18 Non-food Jul-18

Jan-15

Jan-16

Jan-17 Food

Jan-18

Jan-19

Apr-15

Apr-16

Apr-17

Apr-19

Oct-14

Oct-15

Oct-16

Oct-17

Oct-18

Food sales dip into negative territory Non food sales have undergone a period of sustained decline, primarily due to a squeeze on discretionary spending. We expect this squeeze to compounded by currency effects making holidays more expensive for the British public this summer. Year on year 3 month average food sales also fell for the first time in over two years, declining by -1.0% In July (Figure 5). Online share of spend in non-food continues to increase, however growth in online spend is decelerating. Stores continue to underperform compared to online channels, the 3 month average contribution to growth for online channels was up 1.1%, whereas contribution from stores fell 3.2% (figure 6). As technological adoption accelerates and brick and mortar o, we anticipate an increase in brands optimising and consolidating their brick and mortar portfolios, and investing more heavily in their digital offerings.

FIGURE 5: FOOD & NON-FOOD SALES 3 MNTH AVG YOY

-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

year-on-year % change

Jul-18

Jul-19

Jul-16

Jul-17

Jan-17 Food

Jan-18

Jan-19

Sep-16

Sep-17

Sep-18

Mar-17

Mar-18

Mar-19

Nov-16

Nov-17 Non-Food

Nov-18

May-17

May-18

May-19

All Sales

FIGURE 6: 3 MNTH AVG NON FOOD GROWTH, CHANNEL

-4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0%

Online Stores All Channels

Jul-18

Jul-19

Jan-19

Jun-19

Apr-19

Sep-18

Oct-18

Feb-19

Aug-18

Dec-18

Mar-19

Nov-18

May-19

42 | summer 2019 | the retailer