The summer feelgood factor – Is it really sustainable?
“Some of the most recent retail sales figures look almost encouraging with sales up 2.1% in the three months to June 2018, which is the biggest increase for over three years. Moreover, it’s clear from looking at the sectors contributing most to this overall rise that the warm summer had a lot to do with the apparent upturn.
“In small electricals, for example, pick up in air treatment and air cooling was evident in the figures and summer’s traditionally larger scale projects clearly drove growth in tools, workwear, safety wear and protective clothing. This category includes goggles, gloves and boiler suits and according to BHETA’s GfK Quarterly POS Index Q2 2018: July 2017 – June 2018, there was sizeable growth of 4.6% compared to the base of January to December 2017.
“One retailer 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. Drill down into the detail however and the weather which has been such a positive overall may not have done our sector quite so many favours – in fact it may be masking the more serious issues at the heart of retail.
“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 surge in online retail sales was for once rather static.
So, while it’s true that tools sales were up, the home improvement category saw mixed fortunes across the product groups with many of the indoor sectors such as wall and floorcoverings showing a downturn. In fact, strip out the contribution made by barbecues and garden furniture, and overall sales at B&Q actually continued to fall over the summer, something also reflected over the water at Castorama in France. Not even the Homebase situation in the UK 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 influencing our short- term view, while underlying issues continue to need addressing. I don’t mean to sound gloomy and everyone who managed to do well because of the summer deserves a pat on the back for managing stock, promotions and sales to best advantage, but in my opinion, we really need to keep our attention fixed on preparing for the long term.
“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 like Toolstation have challenged the way in which consumers access both tools and consumables in the home improvement market and they continue to pull in more business – whatever the weather.
“In the end it’s all about understanding a) trends and b) how the consumer and professional end user are changing the way they make their purchases. These are the two drivers which will fundamentally boost this sector. Sunshine is just lovely while it lasts!”
For more information about BHETA and about the BHETA GfK Quarterly POS Index, contact BHETA member services on 0121 237 1130.
Source: BHETA
August 2018