The beginning of June may have seen the first signs of summer in 2016, but figures released today by BDO show the UK high street is in the grip of a deep financial winter.
One month after it recorded the biggest drop in sales since the height of the recession, BDO’s monthly High Street Sales Tracker (HSST) recorded a -1.9% fall in overall year-on-year sales for May. Lifestyle sales dropped -2.4% compared to May 2015 and fashion was down -1.9%.
Sales of homewares grew by just 1% year-on-year and non-store sales rose 18.5%. The figures would have been worse were it not for widespread promotional activity in the latter half of May in a bid to increase footfall and shift surplus stock. Since October last year, retailers have been finding it tough to convince consumers to part with their cash.
Aside from an uplift during the January sales, BDO’s HSST figures have shown negative growth since October 2015. Consumer confidence has been knocked by a combination of factors, including uncertainty caused by the June referendum on the UK’s EU membership, and a recent report confirming the pressure on household budgets is as fierce as it has been in nearly two years.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said May had been a bad month across the whole high street. “A fall in retail sales is often sparked by consumers choosing to spend their disposable income on things like eating out, but the evidence is that people are reducing spending across the board,” she said. “Things have been tough for retailers since the end of last summer and there’s not much to suggest confidence will pick up soon. Retailers will have to be strategic with their discounting and confident their product is strong enough to appeal to their customers when they decide to spend.”