Opinion: “August retail figures will give clearer indication of consumer confidence amid cost of living crisis”

  • Written by David Jinks, head of consumer research at ParcelHero

Reports of a fall in consumer confidence this summer may have been exaggerated by retail analysts, recent data suggests.

The latest figures for July, published by the Office for National Statistics (ONS), show an unexpected rise in retail sales. Brits spent +1.3 per cent more in July than they did in June – and a huge +7.8 per cent more than they did in the same month last year. The value of online sales also grew by +5.3 per cent against the previous month as shoppers took advantage of online offers.

Not only did the amount Britons spent climb in July, so did the number of items they bought. Retail sales volumes also climbed by +0.3 per cent in July compared to the month before, meaning this rise in spending isn’t just down to inflation.

Retailers had been bracing themselves for a gloomy set of retail results in July, but these figures don’t show the predicted disaster. It’s encouraging to see that department store sales volumes rose by +1.4 per cent as shoppers prepared for summer vacations.

Online sales have had a particularly tough time recently, but a +5.3 per cent rise in the value of e-commerce sales shows we are still happy to splash the cash if there are bargains to be had. The proportion of online sales rose to +26.3 per cent of the entire retail market in July 2022, up from +25.3 per cent in June 2022. 

Cost of living crisis

Of course, with household bills set to rise steeply and a recession lurking just around the corner, the results weren’t uniformly positive. The BBC points to a -1.2 per cent decline in retail volumes over the last three months (May-July) as an indicator that consumer confidence is dented, although over the same period the amount we spent actually grew by +2.3 per cent.

The real fly in the ointment is inflation. The ONS’s retail sales values are unadjusted for price changes. So, while it’s true that we bought more and spent more in July, a chunk of that extra spending is the impact of rising prices. The ONS says, looking at the figures overall, there is an implied annual growth in prices of +10.4 per cent.

Even so, July’s +0.3 per cent rise in sales volumes don’t show the complete collapse in consumer sentiment that many analysts feared. August’s figures will give us an even clearer picture of whether shoppers are drawing in their horns or continue to enjoy the last of the summer bargains.

An omni-channel approach is vital for all retailers looking to make the most of this unexpected rise in spending while it lasts. ParcelHero’s influential report 2030: Death of the High Street has been discussed in Parliament and reveals that unless retailers develop an omni-channel approach, retail as we know it will reach a dead-end by 2030. Read the full report here.