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BHETA commentary – Economic Snapshot July ’18

Sunshine ups the figures, but does it stand scrutiny?

“Latest retail sales figures look particularly encouraging on the face of it with sales up 2.1% in the three months to June, which is the biggest increase for over three years. Drill down into the detail however and the weather which has been such a positive overall may not have done home improvement quite so many favours – in fact it may be masking more serious issues.

“While food, drink and garden leisure were basking in the heat of boosted purchasing, many non-food retailers saw a 0.5% decline in the quantities of goods purchased. Even the seemingly unstoppable online retail hike was for once rather static. In amongst all this, one operator who was apparently celebrating the warm conditions was Kingfisher, reporting May to July like for like sales growth of 1.6%, as group sales figures rose to £3.26bn.

“Strip out the contribution made by barbecues and garden furniture, however and sales at B&Q actually continued to fall, something also reflected over the water at Castorama in France. Not even the Homebase situation with its 42 store closures and the potential loss of around 1500 jobs is predicted to make any great difference in terms of a resulting B&Q upturn.

“The moral of the story is that yet again we are seeing unusual or one-off phenomena like freaky weather and a summer of sport influencing our short- term view, while underlying issues continue to need addressing. To take the B&Q example further, it is to be hoped that the new investment of £100 million as part of plans to lower everyday prices has a more fundamentally positive effect.

“Talking of which, where strategic thought turns away from short term uplifts and focusses on the actual changes in consumer behaviour and the consequent structure of our industry, then we see positives that may actually be more real and more reliable. Kingfisher’s star performer in the UK is of course Screwfix. Trade-focussed operations like this and also like Toolstation have challenged the way in which consumers access the home improvement market and they continue to pull in more business – whatever the weather.

“In the end it’s structural change that will fundamentally boost this sector not sunshine – enjoyable although that is while it lasts!”

For more information about BHETA, contact the Member Services Team on 0121 237 1130.

Source: BHETA
August 2018

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