Retail sales slowed in July with food and drink emerging as top sellers.
- UK retail sales rose by 1.5% in July, marking a decline from the previous year.
- Food sales saw an 8.4% rise, with non-food sales dropping by 0.5%.
- Online spending decreased as consumers preferred physical stores.
- Retailers increased promotions to attract budget-conscious shoppers.
In July, high street sales in the UK pointed to a significant change in consumer behaviour as food and drink items topped the sales chart amidst a general retail slowdown. A recent report by the British Retail Consortium (BRC) in conjunction with KPMG, revealed that retail sales across the UK rose modestly by 1.5% in July. This growth rate reflects a decline compared to the 2.3% increase recorded in the same period the previous year, and also falls short of the three-month average growth of 3.5%.
A detailed look into the sales data highlights a noteworthy 8.4% increase in food sales, outpacing the 12-month average growth of 7.8%. This surge has been attributed to a slight easing in inflation pressures, descending from a high of 19.2% in March. Conversely, non-food sales experienced a reduction of 0.5% over the last three months, trailing behind the 0.6% average growth observed over the past year.
The retail environment has been further complicated by a decrease in online sales by almost 7% year-on-year. The return to in-store shopping has seen furniture, health, and beauty as among the few categories remaining resilient online. BRC’s chief executive, Helen Dickinson, emphasized that the damp weather has led to diminished spending on clothing and other seasonal items, further contributing to the slowdown.
As the cost-of-living crisis deepens, retailers are engaging in more promotional activities to capture the attention of price-conscious consumers. According to Paul Martin, UK head of retail at KPMG, many shoppers are becoming more strategic in their purchasing, focusing on where bargains offer the best value, which increasingly challenges retail margins and profitability.
Moreover, the UK has witnessed the closure of approximately 6,000 retail outlets over the past five years, under the dual pressures of Covid-19 lockdowns and soaring inflation rates upping the costs of doing business.
The retail landscape reflects a complex interplay of challenges and adaptations as both consumers and retailers acclimatise to economic uncertainties.
