Economic recovery in the UK seems to be sidestepping the retail sector

barterAccording to a new joint report issued by leading accountancy group, KPMG and the BRC (British Retail Consortium), the continuing economic recovery in the UK seems to be bypassing retailers. Data contained in the report indicates that like-for-like sales dropped by 0.1% between December last year and February this year.

While food sales slumped by 1.6%, conversely non-food items rose 1.2% during this three month period.

Furthermore, Kantar Worldpanel have released the results of a study that reveals the price of groceries has fallen by 1.6%. This is the fastest drop ever recorded.

Grocery prices have dropped largely as a result of the continuing price war that is being fought among the leading supermarkets in the UK. This has inevitably had the effect of a drop in food sales.

Sainsbury’s, Asda, Tesco, The Co-operative and Morrison’s have all witnessed their market shares decline, according to the Kantar report. However, bucking this trend, Aldi, Lidl and Waitrose have all seen their market share boosted.

David McCorquodale, Head of Retail at KPMG, believes that the general economic recovery is not presently having a positive effect on the retail sector. He finds it surprising that in the current climate of low inflation and interest, more consumers are not using their increased disposable income to treat themselves. He concludes that it is restaurateurs, as opposed to retailers, that are seeing the benefits from the increased amount of cash in the pocket of the average consumer, as the result of the recent drop in fuel prices.

However, sluggish food sales have been balanced out by enhanced non-food sales.

The biggest sales increases last year were recorded in the furniture and clothing sector. The Director General at the British Retail Consortium, Helen Dickinson, has observed that particularly strong sales were seen across *holiday* products, such as sandals and swimwear.

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