UK retail sales for May underline the growing importance of online sales, which “saved retailers’ bacon”, last month, according to consultancy firm KPMG.
Online sales 'saved retailers' bacon' in May, said KPMG
Online sales were up by 11% compared with May 2012, reported the British Retail Consortium (BRC) Sales Monitor.
Like-for-like retail sales were up by 1.8%, while total sales rose by 3.4% compared with May last year.
David McCorquodale, KPMG’s head of retail, said: “To some extent, retailers had their bacon saved by online sales, underlining the growing importance of the digital channel. Online sales growth helped to counter variable performances on the high street as many chose to take advantage of the same promotional offers from their sofas.”
While sales did not “soar through the roof”, McCorquodale described it as “a very creditable performance” from UK retailers. The sales had not been artificially boosted by one-off factors – such as Easter or last year’s Jubilee.
Remote shopping
City analyst Shore Captal’s Darren Shirley and Clive Black agreed the “tick up in online activity” proved that remote shopping was continuing to gain share.
Noting like-for-like food sales of 0.7%, and food inflation picking up through the period, Shirley and Black suggested wastage management appeared to be robust across the industry, implying continued weakness in food industry volumes.
With the exception of Sainsbury, all of the major supermarket groups were still expected to have sustained weak like-for-like volumes through the spring, they added.
The figures confirmed UK supermarkets were finding it tough to gain traction in a highly competitive market. “We feel that ongoing food waste management and competitive dynamics make the supermarkets a difficult place to invest, albeit we do believe that Tesco now has a clearer focus on generating free cash flow than its peers, hence our more positive stance on Tesco stock,” said Shirley and Black.
‘Topsy-turvy temperatures’
Helen Dickinson, BRC director general, said retailers achieved a good result in May despite topsy-turvy temperatures and continued economic difficulties. “The first month since February to be free of Easter timing distortions showed positive total growth in every category and overall growth well above the 12-month average,” said Dickinson.
Joanne Denney-Finch, chief executive of grocery think-tank IGD, said: “Food companies will be hoping for extended sunshine in June to help offset last year’s Jubilee-enhanced comparatives.
“With the longer evenings and thoughts turning to summer holidays, there could be an opportunity to provide shoppers with more affordable treats.”
IGD’s ShopperVista research showed one-in-five (19%) who has extra cash available will spend more money on indulgent food and drink, up from 12% in 2007, she added.
McCorquodale concluded: “Consumers remain highly sensitive about price and retailers are increasingly using promotional activity to drive footfall or the online equivalent. Just how much margin is being given away to boost sales is yet to be seen in the retailers’ accounts but, on the surface, these promotions seem to be working.”
