June retail sales fall after good start
15 Jul 2008

UK retail sales values fell 0.4% on a like-for-like basis, compared with June 2007. Sales have now been lower than a year ago in three of the past four months, the worst since summer 2005.

Changeable weather, after May's warm sun, hit sales in June. A few sunny days together with clearance events helped some but underlying trade remained tough, with widespread discounting.

Food and drink was the only sector to show significant growth but that was against a weak June 2007. Clothing and footwear fell back sharply after May's sun-driven boost. Furniture and homewares, both large and small, weakened further below year-earlier levels, despite continued discounts and promotions.

Consumer confidence has continued to fall, reaching new record lows. Increasing demands on household budgets and the weakness of the housing market mean shoppers are increasingly price-conscious and reluctant to spend on big-ticket items.

Stephen Robertson, Director General, British Retail Consortium, said:

"The negative result confirms fears May's modest like-for-like sales growth was a start-of-summer blip. While total retail sales grew in June, that was by less than half last month's figure. June saw like-for-like food sales up on a year ago but that was compared with suppressed sales in June 2007, the wettest on record. Almost all other retail sectors recorded falls with electricals, DIY and homewares the worst hit and furniture sales falling faster than for three years."

"Retailers are doing all they can to reassure customers, offering some of the strongest discounts and promotions in decades and keeping a lid on inflation. Surely Government should also be helping hard-pressed customers by not piling-on new tax burdens and resisting its instinct for costly new business regulation which ultimately pushes up prices."

Helen Dickinson, Head of Retail, KPMG, said:

"Although total retail sales grew by 2.1% in June, they continue to be impacted both by food inflation and the wider economic climate. Consumers are managing their budgets carefully to mitigate the effects of these inflationary pressures and the food retailers continue to focus on keeping consumer prices down through high-profile promotional activity, despite the increase in oil and commodity prices."

"This environment is a hugely challenging one for retailers - for the food retailers with their own costs continuing to rise, and for non-food retailers trying to win back a greater 'share of wallet'. For non-food, the highlights in June were few and far between with women's footwear being the only sector to show a reasonable level of growth compared with the previous year."

CYCLE RETAILERS - check out our poll on June turnover in cycle shops here

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