Online Sales Decline, Furniture and Health & Beauty Perform Well
Online sales have continued to decline from the highs experienced during the pandemic era. According to the latest figures, there was a drop of 7% from July 2022 to last month. However, amidst this decline, the furniture and health & beauty categories have performed well.
Wet Weather Dampens Demand for Seasonal Goods
In July, consumers spent less in shops due to wet weather, which dampened demand for typical seasonal goods. The retail sales monitor from the British Retail Consortium (BRC) and KPMG revealed that total UK retail sales increased by 1.5%. However, official figures showed that the rate of price rises stood at 7.9% in the year up to July. When inflation is factored in, there was a drop in volumes.
Food and drink, as well as homewares, were the best-selling categories on the high street in July. However, the rain meant that shopping for summer clothes was down. All categories of clothing showed contraction in what is usually a busy month for fashion retailers.
Food Sales Rise, Non-Food Sales Decline
Food sales rose by 8.4%, which is above the 12-month average growth of 7.8%. Food inflation dropped slightly from its high of 19.2% in March. Although prices were still rising, it was at a slower pace than before. On the other hand, non-food sales fell by 0.5% over the three months to July, below the 12-month total average growth of 0.6%.
Online Sales Continue to Decline
Online sales have continued to fall from the highs reached during the pandemic. They dropped nearly 7% from July 2022. However, there were a few categories that performed well, including furniture, health, and beauty.
Wettest March in 40 Years Impacts Retail Sales
The Office of National Statistics reported that the wettest March in 40 years was the reason behind the only month of no growth in retail sales in 2023. Despite this, there was an increase in card purchases, indicating consumer spending. Sales of Taylor Swift and Foo Fighters tickets contributed to a 4% rise in card spending compared to the previous month and the same month in the previous year, according to Barclay’s consumer card spending figures.
Despite the increased cost of borrowing and inflation, consumers were still willing to spend on live entertainment, holiday bookings, and summer socializing. However, careful discretionary spending resulted in a decline in overall growth compared to June’s figure of 5.4%, as reported by Barclays.
“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,” said Paul Martin, the UK head of retail at KPMG. “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.”
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