Retail sector sees worst year on record in 2019

Retail sales saw first annual overall decline in 2019, which turned out as the worst year on record for the sector, BRC data shows.

Sales on a total basis decreased by 0.1%, compared with 1.2% growth in 2018.

“2019 was the worst year on record and the first year to show an overall decline in retail sales. This was also reflected in the CVAs, shop closures and job losses that the industry suffered in 2019,” said Helen Dickinson, chief executive of the British Retail Consortium (BRC).

The figures also revealed a subdued Christmas for retailers, with like-for-like (LFL) sales declining 1.2 percent year on year, when November and December taken together to iron out the Black Friday distortions.

Over the three months to December, food sales were flat on a LFL basis and increased 0.7% on a total basis.

“Grocery is usually a winner during the festive season, although it is important to highlight that growth has been weakening recently and for many players Christmas did not deliver the results it has in the past,” commented Paul Martin, UK head of retail at KPMG.

Industry data showed British supermarkets, including Sainsbury’s, Walmart-owned Asda and Morrisons, recorded the lowest sales growth over the crucial Christmas trading period for five years.

Tesco, Britain’s biggest retailer, ground out a 0.1% rise in underlying UK sales during a “subdued” Christmas, while Marks & Spencer said it was held back by waste in its food business and weak sales of menswear and gifts.

Susan Barratt, chief executive of IGD, termed the results as “a rarity for Christmas in recent times.”

“Despite the influence of some inflation across the market, shopper spending was not as expected for such a key sales period. As a result, while the value of spending wasn’t down, growth was negligible and volumes declined,” she said.

In an indication of how hard supermarkets had to work over the festive period, Tesco said it had cut prices, delivered the best operational performance in six years and seen the biggest ever day of UK food sales in its history.

Tesco, which has a 27.4% share of Britain’s grocery market, also updated on trading in the third quarter period before Christmas, when LFL sales fell by 0.4%.

Although M&S, one of the best known names in British retail, reported a rise in quarterly underlying sales for its overall UK business for the first time since 2017, it was overshadowed by “one-off issues.”.

M&S said its full year guidance was unchanged, although gross margins were expected to be around the lower end of guidance, largely offset by cost reductions.

With Reuters Inputs