UK Retail Sales Leap Again as Recovery Builds

UK retail sales continued to rise in August primarily due to more consumer spending on home products as "confidence is slowly but surely returning to the UK's high streets".

The retail sales monitor compiled by the British Retail Consortium (BRC) and accountants KPMG showed that the total value of retail sales rose 3.6% year-on-year in August compared to a 3.9% growth in July.

On a like-for-like basis, which excludes new store openings and closures, August sales were up 1.8% on the year, down from a 2.2% rise in July.

"While these figures don't quite reach the lofty heights of what was an exceptional July, they're keeping the good run going and are well above the 12-month average for sales growth," BRC director general Helen Dickinson said in a statement.

"Taken hand in hand with a recent uptick in consumer confidence, the signs are that many of us are feeling a little more positive about the economic outlook and responding well to good deals and new autumn collections alike."0

David McCorquodale, retail head at KPMG, said it was a "solid performance by retailers and demonstrates that confidence is slowly but surely returning to the UK's high streets."

Non-Food Sales Rise Most

The sales growth in August was broad-based. Home categories, especially furniture and flooring sales, saw the highest sales growth while sales of food categories slowed down, primarily due to tough comparison with last year's Olympics season.

"Non-food had an impressive month, as retailers answered the continuing cautious optimism with good ranges and appealing promotions, especially in their back to school offers and items for the home," said Dickinson.

"In contrast, it wasn't such a golden month for food, which performed strongly in 2012 as many of us stocked up on celebratory fare for the month of sport."

Online sales of non-food items showed their best performance this year, growing 15% year-on-year in August. This compares to a 4.8% growth recorded in August 2012, the lowest online growth ever recorded.

'Consumer-Led Recovery'

Recent economic data from Britain showed that the country is on path to recovery, and the confidence of consumers and businesses in the economy is gradually building. Reassured consumers have started spending more on high streets, contributing to the growth momentum.

The economy has grown in the first two quarters of 2013 and is widely expected to post a higher growth rate in the third quarter.

"Overall, these are very encouraging figures which maintain the sense that a consumer-led recovery is tentatively taking shape," Dickinson added.

"It's a positive sign that consumers feel confident enough about the future to make large scale, non-essential investments in their homes," McCorquodale said.

He added that retailers are likely to have a healthy Christmas season with their festive campaigns, given the prevailing favourable market conditions.