The late arrival of summer weather gave some retailers a welcome boost last month, although consumers shunned big ticket purchases amid cost of living pressures and high interest rates.
Data from the BRC – KPMG Retail Sales Monitor shows total retail sales in the UK increased by 0.5% year-on-year in July, recovering from a 0.2% decline the previous month when cool and wet weather deterred shoppers from spending. The latest figure was above the three-month average growth of 0.3% but below the 12-month average of 1.4%.
Food sales rose 2.6% over the three months to July, with strong growth in the final two weeks of July, helped by a mini heatwave.
Meanwhile, non-food sales decreased by 1.7%, slightly better than the 12-month average decline of 1.8%. The BRC noted that consumers bought summer clothes and health & beauty products as they prepared for days out and holidays. However, there was weakness elsewhere as hard-pressed consumers cut back on bigger purchases such as furniture and household appliances.
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, commented: “While summer staples, such as health, beauty, and gardening products, have helped to drive retail sales growth both online and in-store in July, the upturn is likely much less than retailers were hoping for at this key time of the year. A busy summer of televised sport has played a beneficial role in increasing TV, mobile and tablet sales over the last two months, but there’s little evidence of other big ticket purchases taking place.
“Spending levels continue to be governed by whether households have been able to absorb the likes of mortgage and rent increases, or had to limit their spend elsewhere as a consequence. Also, while some sectors are seeing wage growth, others are cutting posts – leaving some consumers mindful that they may need to fall back on savings if they find themselves out of work.
“ONS data for the first quarter of 2024 shows a growing average percentage of household income being put into savings. But it’s looking increasingly likely that the retail sector will see a gradual drip effect from those choosing to spend some, rather than the spending taps suddenly being turned on full.”
