'Boris Bounce' fails to materialise as storms buffet high street sales - BRC

Retail sales struggled in February, as storms, wet weather and flooding conspired to keep shoppers at home, research published on Tuesday showed.

According the latest BRC-KPMG Retail Sales Monitor, on a total basis, sales increased 0.1% in February, compared to a 3.2% year-on-year jump in February 2019. It was, however, above the 12-month average decline of 0.2%.

On a like-for-like basis, which strips out new store openings, UK retail sales declined 0.4% versus a year earlier, compared to 0% growth in January and a 2.6% rise a year earlier. That was below the consensus, for growth of around 0.4%.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Clouds continued to hang over the retail industry in February, as storms Ciara, Dennis and Jorge took their toll on retail sales, particularly in fashion.

“Despite many indicators suggesting a rise in confidence among UK shoppers in recent months, this has failed to translate into higher retail sales. However, the end of the month saw a slightly rise in spending on food and healthcare as a result of concerns around coronavirus.”

Paul Martin, UK head of retail at KPMG, said: “The highest anticipated ‘Boris Bounce’ has clearly struggled to materialise, and looking ahead, Covid-19 isn’t likely to help matters. Subdued grocery has shown a slight recovery, although the edging up of prices will have contributed to that growth. In the short term, any potential supply chain disruption caused by Covid-19 will be felt acutely by grocers.

“The coming weeks will be of key importance to the sector.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Food and healthcare retailers reported a ‘slight rise’ in sales towards the end of the month, but panic among consumers only really took hold at the start of this month.

“Overall demand, however, was beginning to recover pre-virus: growth in total sales slightly exceeded it prior 12-month average. This was a decent result, given that retailers reported that the exceptionally high levels of rainfall and unprecedented flooding stopped people from going shopping.

“Looking ahead, we expect retail sales to fall in March, as the virus keeps people at home, blunting the boost to sale from food stockpiling.”

Clive Black, analyst at Shore Capital, said: “The February Retail Sales Monitor data point has been somewhat overtaken by events as coronavirus takes a hold of Britain and the wider world. As such, we sense it will be the March and April data that will be more telling of any behavioural changes by British shoppers, and so the financial impact.”

Over the three months to February, in-store non-food sales declined 1.9% on a like-for-like basis, while food sales on the same basis increased 0.3%.

Nick Bubb, a retail analyst and consultant, said: “The key food/non-food spilt is buried within the three-month moving averages, but it looks to us as if food sales were up over 1% like-for-like [in February', helped by a bit of coronavirus panic buying at the end of the month, which means that non-food sales must have been the best of 2% down.”