The ONS has reported that on a non-seasonally adjusted basis, retail sales, excluding fuel, climbed by 6.5% in value terms in April. On a volume basis sales were down by 3.3%. Grocery sales fell by 3.9% on a volume basis, while non-food sales were down 1.3%. Online sales grew 1.3% on a value basis during the month.
“Mintel’s household financial tracker for April 2023 showed a downturn in both perceived current financial wellbeing and future financial confidence, with the latter metric now at lows not seen since 2011. Food inflation is hitting consumers hard, and the natural reaction is to withdraw spending.
The trends within the ONS’ retail sales data back this up, and keep the consistent trend seen in the first quarter, inflation-led value growth and underlying volume decline. In food this volume decline deepened in April (from -2.9% in March to -3.9% in April) as consumers naturally cut back on grocery budgets in the face of persistent food and drink inflation. The grocery sector has now seen consistent volume decline for 16 months, and while in 2022 some of this was natural rebalancing from heightened COVID-19 led in-home demand, the volume declines currently within the sector are almost all cost of living related.
Overall non-foods were still in volume decline in April, but if there is a positive it is that this volume decline (-1.3%) was the shallowest seen so far in 2023. In part this is due to weaker comparatives from 2022, but there was volume growth in clothing (+1.0%), health and beauty (+3.0%) and footwear (+11.8%), which continues to be the star performer. As has been the case for a year now the deepest declines remain in household and high ticket categories, with again electricals (-13.7%) and DIY (-5.7%) showing deep declines. The marginally better weather in April did help to bring better footfall for stores, with the share of sales claimed by online falling back to 25.2% which is the lowest level seen since February 2020.
So as expected there wasn’t too much call for optimism in the April results, but there are indications that the multiple bank holidays and the coronation will have helped to add some volume to sales in May. However, with inflation in food remaining stubbornly high, until there is a substantial change in this area we do not expect to see a drastic shift in the underlying performance of the retail sector.”