BRC reports third fall in a row for food sales

Posted on 13 Aug 2014 by The Manufacturer

Food sales are down for the third month in a row, in both like-for-like (LFL) and total terms, according to the British Retail Consortium (BRC).

LFL and total sales of food were down 3.5% and 1.4% in July respectively.

This was largely due to a tough comparable period in July 2013, when events like Wimbledon and the birth of the royal baby helped food sales reach record growth.

The decline in sales has worsened this month as expected, although the 12-month average for food has shown a positive growth of 0.4%.

David McCorquodale, head of retail at KPMG, said: “The tale of two sectors continues, with polarisation between food and non-food. While non-food retailers had a stellar month, surpassing even last year’s record sales performance, the grocers saw sales tumble in value as their competitive pricing continued.

“The grocers’ figures continue to make for gloomy reading for the sector. The impact of their prolonged discounting campaigns may be good news for consumers, but must be being felt deeply by the retailers given like-for-like sales have fallen in value every month for the last 12 months, save for April when Easter helped sales. The headache for the grocer investor is the tonic for the consumer: it’s likely these price wars are here to stay for the foreseeable future.”

Joanne Denney-Finch, chief executive of IGD, said: “Warm weather is usually good for food and drink sales, but since last summer was hotter than this, year-on-year food retail sales were again disappointing.”

Despite the disappointing sales figures for food, some research suggests shoppers are soon to turn their focus to quality when buying groceries.

Denney-Finch said: “However, the stream of positive economic news is having some effect on shopper sentiment. A fifth (20%) of them are planning to prioritise quality over saving money in their grocery shopping, compared with 16% who said this a year ago, according to our latest ShopperVista research. With low inflation and a gradual return to wage growth, people are slowly becoming better placed to act on this rising focus on quality.”