Supermarket Price War Fallout: UK Retail Sales Slip

By Simon Morris On Friday, April 04 th, 2014 · no Comments · In , ,

The latest data reveals that February saw the rate of UK retail sales slip, igniting a halt to the rate of food price inflation. Experts have attributed the general fall to the ongoing supermarket price war. What could this mean for the UK economy going forward into 2014?

According to the British Retail Consortium/KPMG retail sales index, year-on-ear UK retail sales figures were down 1% this February from February 2013. To highlight the contrast, three month average figures showed that whilst retails sales growth expanded by 2.8%, food retail sales actually dragged the data down, with a fall of 1.7%.

Many experts have put this fall in food retail growth down to the Supermarket price wars. The last several months have seen notable UK supermarkets such as Tesco, Sainsbury’s, Asda and Morrison’s lower their prices on items (most famously milk) to attract customers.

David McCorquodale, head of retail at professional services firm KPMG spoke on the significance of the price wars on retail figures. McCorquodale said that: “The grocery sector remains fiercely competitive. February’s figures were impacted by the discounting campaigns launched by the value grocers, which caused a sharp slowdown of overall price inflation in the food sector.”

The data from this survey, whilst still highlighting growth in the retail sector, posts a less positive outlook than the CBI distributive sales survey, which reported sales expanding at their fastest pace since June 2012.

This survey highlighted particular growth in the grocery, clothing, furniture and carpet retail sectors. Online retail figures also continued to grow; sales of non-food items on the internet measured a 14.3% rate of growth from the same time last year.

The British Retail Consortium, when analysing the figures from their survey, suggested that along with the supermarket price wars, falling retail prices can be attributed to the end of the January sales. On this matter Helen Dickinson, general-director of the consortium, said that: “Overall, these figures reflect the considerable challenges still faced by consumers and retailers in the UK.

In conclusion it is clear that overall the UK retail sector is still expanding; this expansion is still a driving factor in the economic recovery. However the supermarket price wars are having an effect on if they continue to do so then that could hamper the nation’s economic situation.

Simon Morris

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