Retail sales rose by 4.1 per cent in August on the previous year, despite the poor weather. According to the British Retail Consortium’s latest (BRC)-KPMG Retail Sales Monitor, health, beauty and food and drink were the strongest performers. However, not all categories benefitted: clothing and footwear saw weaker growth as “families held back spending on children’s uniforms and other back-to-school goods until the last minute.”
E-commerce sales also fell again in August compared to 2022, declining by 3 per cent year on year.
The BRC’s Helen Dickinson OBE says consumer confidence is returning but retailers should prepare for a decline in winter as inflation falls and energy bills rise: “Retail sales in August improved, particularly on July’s poor performance. The figures reflect the improvement in consumer confidence in August, and retailers hope this general upwards trend will carry on.
“Easing inflation will certainly be welcomed by consumers, but as the rate of price rises falls, so will the extra spending. As a result, sales growth may fall in the coming months, even if volume growth does not. Furthermore, high interest rates and high winter energy bills will put pressure on many households to spend cautiously. Retailers are combatting this through a clear focus on great value for consumers, expanding budget ranges, and finding ways to cut costs where possible.”
Paul Martin, UK head of retail at KPMG, adds: “August saw a bounce back in retail sales growth to 4.1%, which will come as a relief for many retailers. As summer comes to an end, retailers will have their sights firmly set on the most crucial period of trading as consumers get ready for Christmas.
“Inflation levels are heading in the right direction, albeit much more slowly than hoped, and savvy shoppers will be Christmas bargain hunting much earlier this year, as price continues to drive decisions and consumers seek out good deals to stretch their budgets. With shoppers becoming more calculated and aware of what they are getting for their money than we have seen for a long time, retailers will have to fight harder for every sale.
“Having survived the pandemic and continuing to battle through the cost-of-living crisis, we are already starting to see the resilience of the sector begin to fade and high street casualties are starting to emerge. Maintaining consumer confidence as we head into the golden quarter will be absolutely vital for some in the sector, who will need a good Christmas in order to continue trading in 2024.”