The lowest consumer spending since the mid-1990s in the chaos of Brexit – BRC | Business

Fears of a deadlock in the UK economy have been exacerbated by a report from retailers reporting record annual consumer spending at record lows since the mid-1990s.

The British Retail Consortium said that clarity on Brexit was an urgent necessity after the drop in sales in June, which contrasted sharply with the exceptional World Cup and activity related to the weather conditions of the year former.

In its monthly health check of the sector conducted with consulting firm KPMG, the BRC said total sales fell 1.3% last month, while the annual growth rate slowed to 0.6%.

Both were the weakest since the launch of the survey in 1996 and added to the evidence that consumers – up to now the mainstay of growth – began to spend less freely despite an increase in disposable income due to higher income growth than inflation.

The Office for National Statistics is expected to indicate that the economy has rocked between April and May when it publishes its latest update on Wednesday.

Helen Dickinson, BRC General Manager, said, "June sales could not match the gloomy weather and last year's World Cup, which led to the worst June of all time. Sales of televisions, garden furniture and barbecues all declined and impulse purchases were fewer. Overall, the situation is bleak: the increase in real wages did not lead to an increase in spending, as the uncertainty badociated with Brexit led consumers to postpone non-essential purchases.

"Businesses and the public desperately need clarity on Britain's future relations with the EU. The lingering risk of an uncompromising Brexit is hurting consumer confidence and forcing retailers to spend hundreds of millions of pounds sterling to put in place mitigation measures. This represents time and resources that it would be better to spend to improve the customer experience and prices. It is essential that the next Prime Minister can find a solution that avoids a Brexit without agreement on 31 October, just before the busy Black Friday and Christmas period. "

The BRC report showed that retail sector problems were concentrated in non-food stores, down 4.3% in the last three months and 2.8% year-on-year.

Consumers are increasingly buying online, with BRC data indicating that over 30% of non-food items have been purchased over the Internet. The digital penetration rate increased from 28.5% to 30.7% between June 2018 and June 2019.

Paul Martin, UK Sales Manager at KPMG, said: "There are few places where retailers can hide from the tough market conditions that have hit the industry for some time. June's retail performance did little to mitigate this, with same-store sales down 1.6% from a year ago.

"The pressure on retailers continues to grow and seems to come from all angles: economic, geopolitical, environmental and behavioral. Consumer spending is likely to decline further as things unfold and profitability remains vital. Most industry players will focus on preservation and adaptation to help them through this difficult time. "