Total like-for-like retail sales in discretionary categories (fashion, homewares and lifestyle) remained below inflation in June, compared to a positive base of +3.2% in June 2024, according to the latest High Street Sales Tracker from BDO.
The disappointing performance was driven largely by low sales growth in stores, at just 0.6% compared to June 2024. This reflects the high street’s continued struggle to attract shoppers and consumer spend and is in stark contrast to retailers’ performance online, where sales grew by 4.3%. This was particularly evident in the fashion sector, where online sales grew by 10% in June, compared to a 0.2% decline on the high street.
This is the sixth consecutive month that in-store sales growth has been below the rate of inflation, which means that sales volumes are significantly down in the first half of this year.
Data from the CBI also suggests that this is the ninth consecutive month that overall sales volumes have fallen, reflecting the ongoing challenge the retail sector faces in attracting consumer spending.
Sophie Michael, Head of Retail and Wholesale at BDO, commented: “Consumer spending continues to be challenged, with little optimism for retailers. We know that consumers are being incredibly cautious when it comes to discretionary spend, given the significant noise around rising job losses and volatility in the geopolitical landscape.
“There is also a growing gap between the performance of physical stores and online retail. Perhaps this is because online retailers have greater agility to adjust their inventory and promotional material to quickly align to consumer preferences, such as promoting summer outfits in extreme high temperatures and pivoting to waterproofs when the rain arrives.
“Some retailers are making targeted investments to improve their store estates to attract more footfall, but we need to see this across the industry along with more support to revitalise our high streets. Store propositions need to be reinvented. Strategic and targeted investment is what is really required for retailers with a significant physical footprint to remain competitive. At the same time, retailers need to continue to invest in blending their physical and online offerings. Without this investment and local government support, we risk seeing further store closures, which has a detrimental effect on our towns and communities.”
NAM Implications:
- Given that discretionary sales (fashion, homewares and lifestyle) flatlined and were lower than inflation, this means volumes were down.
- Then, any real growth must inevitably come at the expense of rivals.
- This means retailers have to identify and optimise a real competitive edge…
- …or watch opportunities drift.
