Retail Sales Monitor
Retail Sales Monitor: Sales Subdued During Indian Summer
Helen Dickinson OBE, Chief Executive, BRC:
Sales growth in September slowed as the high cost of living continues to bear down on households. Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs. The Indian summer also meant sales of autumnal clothing, knitwear and coats, have yet to materialise.
With sales volumes down, growth has been artificially boosted by high inflation over the last two years. As inflation eases, so too will longer-term sales growth prospects. The coming months are crucial for retailers as they enter the “Golden Quarter” and they’re investing heavily to support customers and bring prices down. However, such efforts are challenged by the £400m increase in business rates expected next year. The Chancellor should scrap the rates rise in his upcoming Budget and enable retailers to deliver more value for customers at such a critical time for the economy.
Paul Martin, UK Head of Retail, KPMG:
Retail sales continued to limp along, with growth up just 2.7% despite inflation falling in September.
Food and drink, and health and beauty continue to be the strongest performing categories on the high street, whilst a growing number of categories including clothing, fell into negative territory over September as the unseasonal warm weather delayed trips to the shops to stock up on winter wardrobe purchases. Online sales growth continued to fall, with just health, beauty and jewellery recording positive sales growth. September signals the 26th month of continuous online sales decline and retailers will be hoping for a strong Black Friday in order to turn the tide.
With the warmer weather delaying household heating being switched on, positive news around falling inflation and a hold on rising interest rates, consumers will hopefully be feeling a bit more confident as thoughts turn to Christmas shopping.
After years of battling challenges, the resilience of the retail sector has been dented and we are starting to see the gap between the strongest and the weakest on the high street widen. The fight for Christmas shoppers will be fierce this year, with promotions likely to be earlier and abundant in a bid to loosen tight household purse strings. Consumers will continue to seek out good deals, with price driving purchasing decisions. This is likely to be one of the most important golden quarters that we have seen in years, as for some in the sector, it could very much determine their future.
Food & Drink sector performance, Sarah Bradbury, CEO, IGD:
Food and drink sales grew in September, continuing the positive momentum seen in August. Despite falling consistently for several months, inflation is still significantly higher than recent historical standards, and volumes remain down year-on-year. Retailers are doing what they can to limit the impact of inflation on shoppers, with many announcing further rounds of price cuts and price freezes.
Shopper confidence reached its highest level since December 2021 in September, as fewer shoppers felt they would be financially worse off in the year ahead (35% vs 38% last month and 60% in Sep’22). Trust in the food industry around price, availability and quality rose as well, reflecting a general uplift in mood with warm weather and falling inflation. However, 68% of shoppers still expect food prices to rise in the next 12 months – with 16% expecting them to become much more expensive.