Bigger discounts from retailers ‘boosted shopper demand for goods in October’

November 5, 2019 12:01:00 AM

Retail sales were boosted in October as stores offered bigger discounts to tempt “disengaged” shoppers into making purchases, according to a report.

Total sales increased by 0.6% year on year in October, marking the best performance since April, the BRC (British Retail Consortium)-KPMG retail sales monitor said.

A year earlier, however, sales had increased more strongly, lifting by 1.3% annually in October 2018.

On a like-for-like basis, retail sales across the UK increased by 0.1% year on year in October – the same as a 0.1% increase seen in October 2018.

Helen Dickinson, chief executive of the BRC, said: “Retailers embarked on an extraordinary period of discounting this October as they tried to entice shoppers into making purchases.

“Fashion shops were particularly active, helping non-food return to growth for the first time since July.”

But she continued: “With Brexit still unresolved and a December election creating new uncertainties, retailers will be looking nervously at the months ahead.”

Paul Martin, UK head of retail, KPMG, said: “Growth of 0.1% like for like in October would normally be little cause for celebration, but, after several disappointing months, any tiny hints of growth are most welcome.

“Retailers have clearly been peddling hard to win over disengaged shoppers, especially given continued Brexit uncertainty.

“Aggressive promotion to move stock has seemingly benefited fashion sales, both on the high street and online.

“However, the jury’s still out on whether that progress will benefit the retailers’ bottom line.”

He added: “Fierce focus will be placed on the upcoming Black Friday and Cyber Monday events to kick things into better shape.

“As trading updates from key retailers makes painfully clear, the line between sales growth and profitability is wafer-thin.

“Increased costs – in some cases including further stockpiling in anticipation of Brexit – will impact margins.”

Meanwhile, a separate report from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, said spending on fast food and takeaways saw 6.9% growth year on year in October.

Spending on pubs and clubs also increased by 5.5% annually in October, Barclaycard said, although this was down from a 12.9% year-on-year increase in September.

A consumer survey from Barclaycard also suggested retailers could be in for a challenging Christmas as less than half (47%) of people were confident they will be able to spend as much as they normally do on festivities.

Barclaycard found that a trend towards stockpiling continues, with 17% of people buying everyday items in case of potential shortages.

Tinned goods top the list of stockpiled products, though household supplies such as toilet roll are becoming more popular to keep in reserve, the survey found.

Esme Harwood, director at Barclaycard, said: “As we head into the festive period, shoppers are also feeling cautious about their finances, with many expecting to spend less than normal this Christmas.

“It’s likely we’ll see consumers continue to seek out value – whether that’s through buying more in discount stores or snapping up bargains in the Black Friday sales.”

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