Retail sales below expectations despite warm Easter

Persistent consumer caution left retail sales below expectations in April despite the warm weather over Easter easing the strain on food and garden stores.

Total retail sales increased by 4.1% year on year in April, above both the three-month and 12-month average rises of 1.2% and 1.4% respectively, the BRC (British Retail Consortium)-KMPG retail sales monitor said.

However the BRC said the figures were distorted by Easter falling in April rather than last year’s March, and suggested that two-year average growth figures of 0.4%, a slowdown from the previous month’s 0.9%. were a more accurate reflection of the sector.

The report was released as a separate study from Barclaycard showed consumer spending grew by 2.5% year on year in April, bolstered by pubs and restaurants reaching double-digit growth of 13.1% and 10% respectively as Britons made the most of the sunny bank holiday weather.

The BRC-KPMG report showed that, on a like-for-like basis, UK retail sales were up 3.7% from April 2018.

Paul Martin, UK head of retail at KPMG, said retailers reaped the rewards of Easter and more favourable weather in April, but warned of remaining mindful of the distortion in the holiday’s timing.

He said: “Looking at sub-categories, food retailers were clear winners as families came together for festive feasts and even braved their first picnic or barbecue of the year.

“The long weekend also helped children’s toys and furniture sales, as parents looked to keep youngsters entertained as they returned to home and garden improvements.

“April may have eased the strain on retailers somewhat, but we can’t overlook the fact that the new tax year also presents retailers with additional costs ranging from increased minimum wages to additional pension contributions.

“The task of balancing sales and a profitable margin remains crucial, especially given the widespread promotional activity currently.”

BRC chief executive Helen Dickinson said: “Retail sales were below expectation this month as the sunshine over the Easter weekend persuaded many to pursue recreational, rather than retail, activities.

“Department stores, as well as clothing and footwear shops, were harder hit by the warmer weather, while food-to-go fared much better from it.

“Online accounted for a little under 30% of all non-food sales, and we expect this proportion to continue to rise. Nonetheless, the pace of growth has slowed over the course of the year despite the investment that many stores have made in their digital offering.”

Meanwhile, Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, said essential spending grew by 6.2% in April, bolstered by a strong performance from supermarkets and petrol forecourts.

However it also warned that the wider retail sector continued to face challenges, noting that airline spending dropped to its lowest figure recorded since Barclaycard started tracking the data in 2015.

Esme Harwood, director at Barclaycard, said: “Warmer temperatures, especially over the Easter weekend, led many consumers to spend on experiences and dining out. Overall consumer spending in April has remained relatively modest, with the retail sector continuing to struggle.

“While the Brexit delay seems to have brought some short-term relief to consumer confidence, it’s clear that many shoppers still remain cautious about making any big-ticket purchases such as holidays, a new car or investing in home improvements.”