BDO’s latest High Street Sales Tracker shows total retail sales across discretionary spend categories grew by 4.1% in October, compared to an overall sales decline of 1.7% for the same month last year.
Last month’s growth was driven primarily by online sales, which increased by 9.1% compared to October 2023. In comparison, in-store sales grew by just 1.7%, compared to a weak base of -1.0% the previous year, despite being one month into the so-called ‘Golden Quarter’.
Sophie Michael, Head of Retail and Wholesale at BDO, commented: “While this is an overall positive result, this growth is based on the disastrous sales figures recorded in October 2023. Sales volumes have also not recovered to 2022 levels, when retailers saw a post-pandemic boost.
“With this being the most important time of the year for the sector, if sales figures continue to follow this trajectory the industry is set for an exceptionally tough festive period. The heavy discounting events in November, such as Black Friday, Cyber Monday and Single’s Day, will be even more crucial.
“These results also reflect the trend we have seen for much of this year, with consumers spending more online vs. in-store. Online discounts have likely had an impact on this consumer behaviour, eating further into squeezed profit margins.”
Last week’s Budget announcement included a number of measures that will impact retailers. This includes the 1.2% increase to Employer’s National Insurance contributions, a larger than expected rise in the National Minimum Wage and the reduction in the business rates relief available, taking effect from April 2025.
Michael concluded: “The measures announced last week have a significant impact on the sector and will likely be a barrier to further investment on the high street. Whilst announcements around longer-term reform to business rates will be welcomed by many, these improvements will not come into play until 2026.
“In combination with the additional costs from implementing the new Employment Rights bill, the proposed changes are predicted to put an additional cost burden on the sector of more than £2.5bn annually. This is a huge hit for a low-margin sector and adds to the risk of retailers disappearing from our local communities and shifting more operations online. Both the economic and social impact of these losses to the high street should not be underestimated.
“October’s sales have not provided a much-needed glimmer of hope. Now the Budget announcement is out of the way, all hopes will be pinned on a boost in consumer confidence and discretionary spending as Christmas edges closer.”
NAM Implications:
- Note the flurry of Christmas adverts…
- …hoping that consumers will treat Christmas as a one-off opportunity to forget the ‘normal’ cost-pressure distractions.
- (and retailers ‘forget’ – or postpone their worries re the Budget-induced pressures on retail)
