UK total retail sales may have increased by +0.5% YoY in July, against a growth of +1.5% in July 2023, but non-food sales were in decline, as shoppers opted for clothes and beauty products over home goods, says BRC-KPMG.
Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), says: “Retail sales returned to growth, driven by an increase in food purchases.
“The late arrival of British sunshine led to a better month for summer clothing and health and beauty products as shoppers prepared for days out with friends and holidays away. However, as consumers spent on holidays and entertainment, sales of indoor goods, such as furniture and household appliances, were squeezed out. This left non-food once again in negative growth, particularly for in-store sales.
“Now that election uncertainty is over and Government is rolling out plans to kickstart economic growth, retailers are planning their own investment strategies. 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.”
In-store non-food sales over the three months to July decreased -2.7% YoY, against a growth of +1.2% in July 2023, while online non-food sales increased by +0.3%, against an average decline of -6.9% in July 2023. The online penetration rate increased to 35.5% in July, from 34.9% in July 2023.
Linda Ellett, UK head of Consumer, Retail & Leisure, KPMG, adds: “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.”