Soaring sales of summer fashions, along with strong demand for televisions and video game consoles on the back of rising consumer confidence, helped retailers overcome a decline in food sales last month.
The latest report from the British Retail Consortium (BRC) and KPMG, published today, shows intense competition in the supermarket sector contributed to the first quarterly fall in food takings since the survey began in 2008.
Helen Dickinson, director-general of the BRC, pictured below right, said: “There is a very clear pattern in food sales emerging, where customers continue to be discerning in search of value.”
Average food sales on a quarter-on-quarter basis slipped 0.2 per cent as the “big four” grocers – Tesco, Asda, Sainsbury’s and Morrisons – cut prices to hold market share and fight off discount rivals such as Aldi, Iceland and Lidl.
Joanne Denney-Finch, chief executive at food research group IGD, said it would be “essential” for food retailers to capitalise on the World Cup and other summer events to boost sales.
Sainsbury’s is tomorrow expected to reveal a 1.1 per cent fall in like-for-like sales for the 12 weeks to 7 June as it delivers its last trading update under the leadership of chief executive Justin King, who hands over the reins to commercial director Mike Coupe next month.
KPMG head of retail David McCorquodale said the major supermarkets “appear locked in a race to the bottom” to cut prices.
He added: “The deflationary effect of these prolonged discounting campaigns, whilst good for consumers, is feeding through to the grocers’ margins and share values. The constant price matching brings into question the long term value of the grocers’ brands and positioning, but in the short term is providing the UK consumer with plenty of options.”
Overall like-for-like sales rose 0.5 per cent in May compared with a year ago. Total sales, which include shops that have been open for less than a year, were up by 2 per cent.
Clothing retailers enjoyed their strongest performance since December 2011, while the survey also reported strong momentum for “big ticket” items such as televisions as customers now feel confident enough in the economy to make purchases that had been put on hold.
The fashion sector helped to drive online sales of non-food products up 17 per cent last month.
The BRC said takings over the internet now account for almost 19 per cent of total non-food sales.