Spring has sprung for UK retailers

The UK’s retail sector experienced big year-on-year growth in March, but department stores remain on red alert

The key findings from the Office for National Statistics showed

  • In the three months to March 2019 (Quarter 1), the quantity bought in retail sales increased by 1.6% when compared with Quarter 4 (Oct to Dec) 2018, following sustained growth throughout the first three months of the year.
  • All store types except department stores and household goods stores increased in the quantity bought in the three months to March 2019, when compared with the previous three months.
  • The monthly growth rate in the quantity bought in March 2019 increased by 1.1%, with food stores and non-store retailing providing the largest contributions to this growth.
  • Year-on-year growth in the quantity bought increased by 6.7% in March 2019, the highest since October 2016, with a range of stores noting that the milder weather this year helped boost sales in comparison with the “Beast from the East” impacting sales in March 2018.
  • Department stores were the only store type to decrease in the quantity bought when compared with March 2018, with a fall of 0.3% in March 2019.
  • Online sales as a proportion of all retailing increased to 18.6% in March 2019, from the 18.1% reported in February 2019.

Phil Mullis, Partner and Head of Retail and Wholesale at leading accountancy firm, Wilkins Kennedy, said: “These figures reinforce just how much of an impact last year’s ‘Beast from the East’ had on the UK high street; with this March’s mild weather helping strong year-on-year growth in respect of the value spent (7.3%) and the quantity bought (6.7%).

“Food stores contributed a significant chunk of this growth thanks, in part, to Mother’s Day (and food inflation), but on the flip side, people still aren’t going for big ticket items, which is driving the downfall at some household goods and department stores.

“The ongoing uncertainty surrounding Brexit and the fluctuation of the pound are some of the main reasons consumers are so reluctant to splurge at the minute.

“Given the volatility of the pound in response to Brexit movements, retailers importing goods would be wise to hedge against exposure to foreign exchange to aid budgeting certainty.

“While these statistics of growth are encouraging news for the sector, it was disappointing, yet hardly surprising, to see Debenhams enter administration.

“And finally, it is important to remember that retail isn’t dying, it is evolving to reflect what consumers now want when they are visiting the high street, and part of this process involves businesses either shutting down or receiving wake up calls to change and tailor their offering in order to survive.”