Chilly May weather dampens UK retail sales

http://www.theguardian.com/business/2015/jun/09/chilly-may-weather-dampens-uk-retail-sales

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Poor weather dented demand for fashion last month and falling prices continued to knock takings at grocers, leaving overall retail sales flat, according to industry figures.

The British Retail Consortium said sales values were unchanged from a year ago in May on a like-for-like basis, which adjusts for the impact of new store openings. Sales rose 1.1% in total terms.

There was support from strong furniture sales on the back of a buoyant housing market, but clothing and footwear suffered their deepest declines in total sales for eight months.

The flat sales picture for May comes as a setback to retailers after a weak performance the previous month, when comparisons with 2014 were distorted by the earlier timing of Easter. Sales had fallen 2.4% on the year in April, the weakest performance for three years.

“With Easter distortions behind us, May’s retail sales figures were disappointingly flat,” said David McCorquodale, head of retail at the report’s co-authors, KPMG.

“Buoyed by a conclusive result in May’s general election, the housing market picked up, leading to stand out performances for furniture and homeware sales ... Elsewhere, footwear and fashion sales wilted against strong performances last year as consumers put off the summer wardrobe refresh as they waited for the unseasonably cool May weather to improve. Many retailers stretched out summer sales events and deepened discounts in order to try and entice consumers through the door.”

While several surveys have suggested consumer confidence is strong on the back of low unemployment and a gradual pick-up in wages, retailers face tight margins as shoppers look for discounts, particularly on food.

This month may see retailers again struggle to grow year-on-year sales, given tough comparables with June 2014 when the World Cup boosted trade, McCorquodale said. But there were some reasons to be cheerful on the high street.

“With consumer confidence nearing pre-crisis positivity, retailers will be hoping that the improving job market, low inflation rates along with a dollop of summer sunshine will provide a welcome boost,” he said.

A separate report suggests Britons are using some of the money they save from lower food prices to treat themselves. Consumer spending rose 4.2% in May from April, according to Barclaycard, which processes about half of all card transactions in the UK.

The company found spending on non-essential items increased 6.2% – with cinemas and pubs reporting the biggest increases, while spending on essentials fell 1.4%.