British shoppers avoided the nation’s high streets in droves in February, as official data pointed to a sharper than expected drop in the volume of retail sales, adding to anecdotal evidence that consumers are tightening their belts.
The Office for National Statistics said sales volumes in February fell by 0.8 per cent from January and by 1 per cent when petrol sales are stripped out. The drop is bigger than the average decline of 0.6 per cent forecast by a Thomson Reuters poll of economists.
The data show weakness in almost every category of retailing with the exception of non-store retailing – generally internet sales – and petrol. Food stores showed a month-on-month drop of 0.4 per cent, appearing to confirm the trend noted in recent weeks by chiefs at the helm of the nation’s supermarkets. Justin King, Sainsbury’s chief executive, said on Wednesday there had been a significant fall off in sales since the end of Christmas. “The surprise is just how sudden that is,” he said.
But the latest data also point to weakness elsewhere. Non-specialised stores, a category that includes department stores, saw sales volumes fall 3.2 per cent in February from January, the weakest performance since June 1998 although similar drops were seen in February 2009 and March 2008.
Year on year, sales at non-specialised stores are up 4.9 per cent but sales at food stores are down 2.2 per cent from February 2010. In fact, sales volumes at predominantly food stores have declined year on year in every month since January 2010.
Sales volumes at household goods stores decreased 2.5 per cent from January, but the ONS noted that January’s figures may have been inflated by an unusual spike as consumers rushed in the first few days of the month to beat the rise in VAT. The move to 20 per cent from 17.5 per cent was implemented on January 4.
When looked at by sales values – a number which takes account of price changes – the drop is much smaller at 1.1 per cent. But compared with values in February 2010, the drop is 5 per cent. The ONS said it estimated that prices in household goods stores had risen 4.8 per cent in February from January, a record since the retail sales series began in 1988.
The data come amid a swathe of disappointing results from UK retailers.
Lord Wolfson, Next chief executive and a Tory peer, warned retailers faced a tough few years in the UK.
“The consumer environment is likely to be dominated by the challenges of global inflation, public sector cuts and limited growth in consumer credit. These factors mean that retailers cannot plan for never-ending growth in like-for-like sales that many have enjoyed over the past 15 years,” he said.
Ian Cheshire, chief executive of B&Q-owner Kingfisher, said “I see no let up in the challenging environment in the short term” as the group reported annual results.
Ray Kelvin, founder and chief executive of fashion retailer Ted Baker, also warned of “uncertain” trading conditions.
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