Katie Lance
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Weak British retail sales flash ‘warning sign’ for crucial shopping season

British consumers have pulled back on splashing out for big ticket items and clothing and that’s a “warning’” for the retail industry as it’s already entered into a key trading period for the year.

Total retail sales rose just 0.2% in October year-over-year, the slowest growth rate since May and below the 12-month average, according to figures from the British Retail Consortium and KPMG released Tuesday. Like-for-like sales slid by 1%.

The “meagre” month was marked by the worst performance of non-food sales since its record began in January 2011, BRC said. It appeared that shoppers ditched going to stores and embarked on outdoor experiences or excursions during the period which included a week-long break for schools across the country.

Separately, Barclays said its Barclayscard data showed consumer spending in October grew 2.4% in October year-over-year — down from 3% in September. Sales for clothing broadly fell and sales at electronics stores dropped for a 12th straight month.

The “BRC data [is] a warning sign ahead of a tough quarter,” wrote Andrew Porteous, a European retail industry analyst at HSBC, in a research note. The Christmas shopping season and expanding Black Friday events in the U.K. are key drivers for the crucial fourth quarter for retailers.

“Key consumer indicators continue to support caution. Living cost inflation is high, real wages remain in decline and the increase in interest rates could be a further headwind for discretionary consumption,” Porteous said.

Discount-chain operator B&M European Value Retail SA BME, +0.61%   and Associated British Foods PLC ABF, -0.55%  , which runs fast-fashion seller Primark, “are well placed to benefit” because consumers facing tougher times tend to change their spending behavior to preserve purchasing power, said HSBC.