Retail Sales Monitor
Retail Sales Monitor: Summer Rain Dampens Demand
Helen Dickinson OBE, Chief Executive, BRC:
The slowing pace of retail price inflation fed through into slower sales this July. Spend was further depressed by the damp weather, which did no favours to sales of clothing, and other seasonal goods. Online retail was particularly hard hit as the long-term trend back to in-store spending continued, leading to the lowest online penetration rate since the pandemic began.
Consumer confidence remains fragile, with last week’s rise in interest rates pushing mortgage rates up ever higher. The Government must get a handle on the economy, offering a solution to languishing GDP growth in a way that supports both households and businesses. Only by bringing inflation to heel, and creating the economic conditions for future growth, will we see a meaningful improvement in the retail outlook.
Paul Martin, UK Head of Retail, KPMG:
As the storm clouds came out, shoppers retreated, with like for like sales growth a dismal 1.5% up in July. Furniture and food & drink were the best sellers, whilst the wet weather meant no need to restock summer wardrobes, with all categories of clothing falling into negative sales territory, in what is usually a busy month for clothing retailers. Online sales continued to slide, falling nearly 7% year on year, with just a handful of categories such as furniture, health and beauty performing well.
We are starting to see a big rise in the number of promotions that retailers are putting in place in order to get shoppers through the door, as they battle to keep market share. Price conscious consumers are shopping more carefully, more aware of where bargains can be found and what they are getting for their money – which is biting hard into retail margins and profitability. UK consumers have been hugely resilient throughout the cost-of-living crisis, but stubbornly high inflation coupled with rapidly rising interest rates will test their ability and willingness to keep on spending for the rest of this year.
Both consumers and retailers are finding that they are having to get used to doing more with less as conditions remain incredibly challenging.
Food & Drink sector performance, Sarah Bradbury, CEO, IGD:
Food and drink sales continued to grow in July, although the rate of growth was the lowest since January. Sales growth was driven by inflation as volumes remained in negative territory, in part due to the unseasonably wet weather, especially compared to last July's heatwave.
Despite the poor weather, IGD’s Shopper Confidence Index increased for the fourth month running, reaching its highest level since December 2021. Confidence has likely received a boost as fewer people are experiencing rising energy bills (51% compared to 68% in Jul’22) and fewer shoppers expect to be financially worse off in the year ahead (37% compared to 50% in Jul ’22). Furthermore, fewer shoppers are concerned about food price rises with 68% expecting them to get more expensive in the next 12 months compared to 89% last July.
TO DOWNLOAD THE FULL REPORT PLEASE SIGN IN
Only members and associate members can access this exclusive insight.