Retail Sales Monitor
Retail Sales Monitor: Bank Holidays Fail to Boost Sales Growth
Helen Dickinson OBE, Chief Executive, BRC:
The trio of bank holidays failed to get shoppers spending as sales growth slowed to its lowest level in six months. While food sales got a boost from the Coronation weekend, this was not sustained for the rest of the month. Meanwhile, growth in discretionary spend continued to tumble as the high cost of living squeezed households. There was cause for some optimism, however, as brighter weather at the end of the month led to a much-needed pick-up in summer fashion sales, as well as gardening and DIY products.
With consumer confidence still recovering from record depths, and continued tightening of household incomes, we are unlikely to see substantial sales growth in the coming months. But, with signs that inflation has possibly peaked, retailers are hopeful that confidence will continue to improve. Now is not the time for Government to impose more regulation and tax on business that will push up costs for retailers and prices for their customers.
Paul Martin, UK Head of Retail, KPMG:
Despite warmer weather, a national celebration and month of bank holidays, retailers saw pretty mild growth in May with sales figures up just 3.9% on last year, and lower than the 5% growth seen in April.
High street retailers saw more categories slip into negative sales territory last month, with health, beauty and food driving sales on the high street. The gloom continued for online retailers with just four categories registering positive sales figures and total sales down by 3%. Online penetration rates continued to slide, sitting at 36%, as consumers return to bargain hunting in store.
Retailers will be hoping that inflation levels in the wider economy continue to move in the right direction in order to boost much needed consumer confidence. The wild card for the retail sector remains uncontrollable food inflation, which shows little sign of coming down in the near future, and this is having a significant knock-on effect on non-essential spending. The grocery sector is the fastest growing part of the consumer wallet at the moment, so consumers are having to spend more of their money in the one area that is getting disproportionately more expensive.
UK consumers are resilient, but with stubbornly high food inflation continuing and the prospect of further interest rate rises threatening to impact their ability to spend elsewhere, it is likely to be a long, hot summer for the retail sector.
Food & Drink sector performance, Susan Barratt, CEO, IGD:
May’s food and drink sales again saw strong value growth, with double-digit inflation driving sales consistently over the four-week period. Volume sales were marginally negative, even with a brief uptick from the events surrounding the Coronation of King Charles.
Despite food price inflation reaching its highest level for 45 years in the first quarter of 2023, shoppers overall seem slightly less fearful about how high prices will go. Although three-quarters (75%) expect food prices to get more expensive in the year ahead, this is actually the lowest level since July 2021, and IGD’s Shopper Confidence Index continued to improve in May to reach its highest level in more than two years. At the same time, the number of shoppers expecting to be better off financially in the year ahead has risen, up from 14% this time last year to 18%.
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