Drop in food sales puts dampener on retail sector recovery

Falling food sales put a dampener on the recovery in the wider retail sector last month as a soggy end to July left Britain's beleaguered grocers under renewed pressure, figures showed today.

Like-for-like sales across the sector rose by 1.2% with total sales up 2.2%, according to the British Retail Consortium (BRC)-KPMG retail sales monitor.

But in food, total sales fell for the first time this year - excluding distortions caused by Easter - as the early July heatwave was followed by a disappointing spell of weather. For the three months to July, like-for-like food sales were 1.6% lower.

Furniture, home accessories and house textiles were the best performing categories in July, supported by a robust housing market, the report found.

it was retailers selling these kinds of products, rather than supermarkets, that were seeing the benefits of household budgets boosted by rising wages and more jobs.

BRC director general Helen Dickinson said: "It seems that consumers remain content to budget carefully on their necessary food outlay and spend that little bit more on purchases they have perhaps deferred."

The 1.2% like-for-like rise in retail sales for July comes after an uptick of 1.8% in June and a flat May. It compares with a 0.3% fall in like-for-like sales in July 2014.

David McCorquodale, head of retail at KPMG, said "Improved consumer confidence is slowly winding its way to the tills.

"Grocers continue to feel the heat with like-for-like sales down 1.6% in the last three months, but this is an improvement from the doldrums of last year."

He added that children's footwear and fashion were boosted by the start of the summer holidays. Womenswear had a surprisingly weaker month in July but sales of accessories such as bags and shoes soared.

"Looking ahead, retailers will be hoping more summer sunshine, coupled with confirmation that interest rates will stay at 0.5%, will keep consumer confidence riding high into August."

Joanne Denney-Finch, chief executive of grocery data body IGD, said: "Food and drink sales are particularly influenced by the weather at this time of year.

"July began with a heatwave and strong food sales but the rest of the month was colder and wetter than average and July's overall performance disappointed after a run of more encouraging months."