Retail sales picked up in January as cautious shoppers seek out bargains

Retailers saw a “welcome improvement” in sales growth in January, following the worst December performance in a decade, a report has found.

But the figures point more towards shoppers’ obsessions with bagging a bargain in store sales, rather than a real improvement, the BRC (British Retail Consortium)-KPMG retail sales monitor cautioned.

Experts said consumers are focused on finding value for money as they deal with their costs.

Total retail sales increased by 2.2% year-on-year in January, following 0% year-on-year growth the previous month – the worst December performance since 2008.

January’s 2.2% increase in total retail sales was the highest growth since June.

It is also higher than a 1.4% year-on-year increase recorded in January 2018.

UK retail sales increased by 1.8% in January on a like-for-like basis from January 2018.

Helen Dickinson, chief executive of the BRC said the latest figures were “a welcome return to growth this month after December’s disappointing sales figures”.

She continued: “But while retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished.

“And it will not just be brick-and-mortar stores looking nervously to the future, as online sales continued to grow below the long term trend.

“Furthermore, the risk of a disruptive no deal Brexit could see these fortunes reversed.”

Paul Martin, UK head of retail at KPMG said: “Following the worst December trading performance in a decade, January brought a welcome improvement with total retail sales up 2.2%.

“Having said that, this increase points more to British shoppers’ obsession of bagging a bargain and price inflation, rather than any real improvement, and these peaks and troughs continue to leave retailers feeling increasingly anxious.

“The colder weather and continual discounting drove up fashion sales, whilst the increased focus indoors also boosted furniture sales.

“However, not all categories or players have been so fortunate, and even online growth continued to slow.”

Meanwhile, a separate report from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, said consumer spending grew 2.9% year-on-year in January, returning to modest growth following a dip in December.

Growth in consumer spending on essentials was stronger than non-essential spending growth, Barclaycard said.

Barclaycard’s research found seven in 10 (70%) consumers say they have become much more careful to seek out value for money in the purchases they make.

Esme Harwood, director at Barclaycard, said: “Looking forward, consumers will continue to prioritise value for money, especially as many have concerns about potential price increases on everyday essentials.”