UK retail sales pick up as summer finally heats up
Retail sales returned to growth in July after the long-awaited summer boost for retail finally arrived along with the warmer weather.
Total retail sales increased by 0.5 per cent year on year in July, up from the three-month average growth rate of 0.3 per cent, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor
Retail sales fell 1.5 per cent month on month in June.
Sales of clothing, health and beauty products did particularly well during the month as shoppers “prepared for days out with friends and holidays away”, chief executive of the BRC Helen Dickinson OBE said.
Food sales, too, increased by 2.6 per cent year on year over the three months to July – aided by warmer weather and the euros – albeit below the 12-month average growth of 5.3 per cent.
Nathan Peacey, Head of Retail and Consumer at Foot Anstey, said: “Consumer confidence is on the up but only incrementally.
This is reflected not only in the modest headline growth but also the more selective choices consumers are making, as shown in BRC’s analysis across the categories.
The fight among retailers for the share of consumers’ wallets shows no sign of abating… Retailers will be relieved to see the market return to growth but we are not out of the woods yet.”
Non-food sales down
Non-food sales decreased 1.7 per cent overall year on year over the three-months to July, against a decline of 0.5 per cent last July.
“As consumers spent on holidays and entertainment, sales of indoor goods, such as furniture and household appliances, were squeezed out,” Dickinson added.
In-store non-food sales were the worst-performing area, falling by 2.7 per cent year on year. The proportion of non-food items bought online rather than in-store increased to 35.5 per cent in July, from 34.9 per cent in last year.
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, said: “While summer staples… 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.
However, some non-food goods, particularly sporting goods related to the Olympics, saw a boost.
Data from Shopify showed that demand for squash rackets increased by 49 per cent, while demand for archery products rose by 74 per cent.
Back to school goods, too, were popular: demand for school uniforms rose by 143 per cent as “parents [got] ahead with their back-to-school shopping”, Deann Evans, EMEA Managing Director at Shopify, said.
The rest of the year should see retail balance after an up-and-down year of sales, with “a gradual drip effect from those choosing to spend some,” Ellett said, “rather than the spending taps suddenly being turned on full”.
“Now that election uncertainty is over and [the] Government is rolling out plans to kickstart economic growth, retailers are planning their own investment strategies,” Dickinson added.
Many will be looking to the Autumn Budget, keen to see an end to business rates rises under the new Labour government… They will also be looking for any details of the reform of the whole business rates system, promised in Labour’s manifesto,” she said.