“Retail sales returned to growth, driven by an increase in food purchases. The late arrival of British sunshine led to a rise in sales for summer clothing and health & beauty products as shoppers prepared for days out with friends and holidays away. However, as consumers spent on holidays and hospitality, sales for indoor goods, such as furniture and household appliances, found themselves squeezed out. This left non-food once again in negative growth, particularly for in-store sales.

“Now that the election uncertainty is over and Government is rolling out their plans to kickstart economic growth, retailers are planning their own investment strategies. Many will be looking to the Autumn Budget to find out whether business rates will continue to rise under a Labour government. They will also be looking for any details of the reform of the whole business rates system, promised in Labour’s manifesto.”

“While summer staples, such as health, beauty, and gardening products have helped to drive retail sales growth both online and in-store in July, the upturn is likely much less than retailers were hoping for at this key time of the year.  A busy summer of televised sport has played a beneficial role in increasing TV, mobile and tablet sales over the last two months, but there’s little evidence of other big ticket purchases taking place. 

“Spending levels continue to be governed by whether households have been able to absorb the likes of mortgage and rent increases or had to limit their spend elsewhere as a consequence.  Also, while some sectors are seeing wage growth, others are cutting posts - leaving some consumers mindful that they may need to fall back on savings if they find themselves out of work.

“ONS data for the first quarter of 2024 shows a growing average percentage of household income being put into savings.  But it's looking increasingly likely that the retail sector will see a gradual drip effect from those choosing to spend some, rather than the spending taps suddenly being turned on full.”

“Shopper confidence rose nine points in the days immediately after the election, while England's success at the Euros inspired a nine-point increase in focus on quality. Although, they have both fallen back in line since. Further good news comes from July’s volumes which were higher than they were last year, marking three consecutive months of year-on-year volume growth for the grocery market.

“Grocery sales in July were higher than last year, with sales particularly strong in the final two weeks of the month, undoubtedly helped by the mini heatwave the UK enjoyed at the time which saw the hottest day of the year recorded so far.

“While the new Government sets expectations around change taking time, shoppers are adjusting their outlook. As Labour lay out their plans for the years ahead, we expect to see further divergence in experience."

“An August heatwave and GB's successes at the Olympics are likely to cause a short-term uplift in confidence and therefore more trade-up opportunities as we’ve previously seen at the Euros. This would continue a three-month trend of continued growth for grocery, as spurred on by the weather.”