Conlumino viewpoint on BRC
Conlumino Global Research Director, Maureen Hinton, comments: At first sight the BRC figures suggest a grim view of retail in April, but the timing of Easter has dragged the numbers down; a trend we have seen reflected in John Lewis’ and Waitrose’s weekly figures. When looking at the three month average, however, the trend is much more positive with total sales up 1.9%, and both food (+0.4%) and non-food (+3.2%) showing improving trends.
The BRC reports that fashion and beauty outperformed while home underperformed. Though the former will have benefitted from a warmer spell of weather, a cold Easter weekend will not have helped the DIY and gardening sector. Also the raft of early sales and discounts across many clothing retailers points to sales gains being at the expense of margin.
With price competition and deflation rampant in food retail, higher volumes must be driving sales. With wage growth at last growing faster than prices (where deflation is now common) and the economic outlook more settled, we are witnessing a growing consumer confidence. While this confidence is still on shaky ground, having a settled outcome to the election should help to cement the trend upwards.
Meanwhile online continues to take more share as a channel, with non-food sales growing by 15.4% compared with 11.2% in April last year and the penetration rate of online in non-food increasing year on year from 15.9% to 17.6%.
Therefore when we account for seasonality the trend is an improving one for retail, but as ever margins are being squeezed; the home-related sectors are still under pressure; and online is taking more share of spending. With retail spending a big contributor to economic growth, the new government must be careful not to take any measures that will hinder it, but with a new, supposedly Thatcherite, business secretary we can hope that any measures are positive for both consumers as well as retailers.