World Cup boosts June food sales

by James Hall - 13/07/2010

"Hot weather and the World Cup led to an increase in sales of barbecue products, salads and ready meals in June. "

However, sales growth of clothing and footwear products slowed over the month compared to the previous year, showing that consumer confidence remains fragile.

According to the British Retail Consortium-KPMG Retail Sales Monitor, which measures high street sales, like-for-like sales in June rose by 1.2pc. Food sales rose by 3.4pc on a three-month weighted average to the end of June.

Shop! Mary Portas reviews M&S Simply FoodStephen Robertson, director-general of the BRC, said that the overall 1.2pc figure represented solid growth.

"This is decent sales growth, mainly explained by good weather and earlier summer clearance [sales]. The performance is better when you remember the comparison is with a similarly strong performance in a sunny June a year ago.

"Barbecue products, salads and ready meals were in big demand. In non-food retailing it was a mixed picture. TVs were really the only football-related item that generated significant spending. Summer clothing sold less well than the weather might suggest because many people had bought when the sun first arrived in May," he said.

Meanwhile retail insolvencies fell by over 26pc in the second quarter of 2010, according to accountants PricewaterhouseCoopers. Companies entering into company voluntary arrangements (CVA), or falling into administration, receivership or liquidation fell from 465 in the first quarter to 342 in the second quarter, the company said.

Richard Boys-Stones, business recovery partner at PwC, said that retail insolvencies in the second quarter hit the lowest level since the end of 2007. However he said that a positive outlook for retailers is not guaranteed.

"So far we have really not seen a severe consumer downturn. It is likely that with increasing uncertainty, households will batten down the hatches resulting in further pressure on retailers to maintain their share of consumer spend. Interestingly, we may see a wide regional variation in behaviour due to the relative reliance of different parts of the country on the public sector. Inevitably it will be the small to medium-sized retailers who will find it hardest, as they continue to face the strength of the supermarkets and the growth of the internet on top of the tough economic environment," he said.

Mike Jervis, business recovery partner at PwC, said that many retailers are entering into informal arrangements with landlords.

"Many are paying rent monthly. From both the landlord and retail tenant perspective, this must make sense. The fear we have is the impact of any further loss of confidence on the part of the consumer - the obvious issues being job losses and VAT increases," he said.

More Details: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7885805/World-Cup-boosts-June-food-sales.html