Brexit Vote Fails To Deter Shoppers As Retail Sales Grow At Fastest Rate Since January

Despite weakening business activity in the wider economy and fragile consumer confidence following the Brexit vote, latest figures from BRC-KPMG Retail Sales Monitor show there was solid growth in the retail sector last month.

Like-for-like sales increased by 1.1% year-on-year in July (compared to a 0.5% fall in June) as the warmer weather and heavy discounting by retailers boosted trade. On a total basis, sales rose 1.9%, also the strongest growth since January and ahead of the 12-month average of 1.2%.

Helen Dickinson Chief Executive of the British Retail Consortium, commented: “This month’s solid sales figures may come as a shock to some given the slew of early indicators suggesting that consumer activity was slowing in the wake of the referendum result. However, little has materially changed for most UK households in the wake of June 23, so it is not surprising to us that sales are simply responding to their normal underlying drivers.

“The big question for retailers is whether that success can be carried forward into full price sales. Whilst retailers continue to monitor the situation in the wake of Brexit, responding to rapid and complex change in consumer behaviour in the midst of a highly competitive market remains the substantive challenge.”

David McCorquodale, Head of Retail at KPMG, added: “Warmer weather helped blow away some of the post-referendum blues, boosting the UK feel good factor and giving consumers a sense that ‘life goes on’ following the initial shock of the Brexit vote.

“This first full month of retail sales figures post-vote suggests that UK shopping patterns haven’t changed versus previous years. For retailers, plans to improve productivity remain top of mind to guard against recent increases to their cost base as well as making sure they can weather what are likely to be more uncertain times ahead.”

Commenting on Food & Drink sector performance, Joanne Denney-Finch, Chief Executive at IGD, said: “Given the sharp drop in food and drink spending in the immediate aftermath of the referendum, a return to sales growth during July was very encouraging. As some of the economic and political uncertainties were resolved, shopper confidence began to recover. In July, 30% of shoppers felt they would be worse off over the next 12 months; broadly comparable with the 27% who said this in July 2015, but not the 49% we saw immediately after Brexit. The next few months’ sales figures will hinge largely on whether we see the return of food inflation, following the drop in sterling. If so, this is likely to be a gradual effect.”