The news is full of national retailers opening and closing stores, but do those stories truly reflect high street trends in June? Could shoppers and retailers take the heat, and where have wider economic changes left us all?
Discover the answers in our exclusive key insights into the UK economy for June, informed by the comprehensive data we are able to share thanks to our membership of the British Retail Consortium. Take full advantage of this convenient snapshot of current trading conditions on the high street to understand the climate beyond your own doors.
Don’t forget to join us for our half-year briefing about the UK retail market performance and economic trends year-to-date in 2023, taking place at 15:00-16:00 this Thursday, 10th August. This event is an excellent opportunity to catch up on valuable insights in a more dynamic presentation of the latest research and data. Register here.
Footfall: Shopper numbers down in June overall, but up on the High Street
Headline Statistics:
- Total UK footfall decreased by 1.9% in June(YoY), increased 0.9% from May-23 but worse than the 3-month average decrease of 1.1%.
- High Street footfall increased by 0.6% in June(YoY), 1.1% better than last month’s rate but worse than the 3-month average rise of 1.1%.
- Retail Parks saw footfall decrease by 2.6% in June(YoY), an improvement of 1.5% on last month’s rate and better than the 3-month average of 1.8%.
- Shopping Centre footfall decreased by 4.2% in June(YoY), 0.6 percentage points better than May 2023 and worse than the 3-month average rise of 2.9%.
Commentary
Helen Dickinson OBE, Chief Executive of the BRC, said:
“Footfall was down on June last year as the hot weather meant that people opted to enjoy the outdoors. Shopping patterns are still finding a new balance, as the high cost of living is affecting people’s habits and choices. We saw fewer visits to shopping centres and retail parks than last year. But High Street locations were busier and footfall in major cities also improved, thanks to an increase in international tourism.
“The UK is the only European destination without tax-free shopping: Government must capitalise on the uptick in tourism by reintroducing VAT relief for overseas visitors to boost the UK’s attractiveness compared to other destinations and stimulate spending. Government should also seek to mitigate the impact of the slew of cost pressures continuing to bear down on the industry, including new regulation and an inflationary whack to business rates next spring.”
Inflation On A Downward Trend
Headline Statistics:
- Shop Price annual inflation decelerated to 7.6% in July, down from 8.4% in June. This is above the 3-month average rate of 8.4%. Shop price growth is at its lowest this year..
- Non-Food inflation decelerated to 4.7% in July, down from 5.4% in June. This is below the 3-month average rate of 5.3%. Inflation is at its lowest since December 2022..
- Food inflation decelerated to 13.4% in July, down from 14.6% in June. This is below the 3-month average rate of 14.5%, and is the third consecutive deceleration in the food category.
- Fresh Food inflation slowed further in July, to 14.3%, down from 15.7% in June. This is below the 3-month average rate of 15.7% but inflation in the fresh food category remains elevated. Nevertheless, inflation is at its lowest since November 2022.
- Ambient Food inflation decelerated to 12.3% in July, down from 13.0% in June. This is below the 3-month average rate of 12.8% and is the lowest since February 2023.
Commentary
Helen Dickinson OBE, Chief Executive of the BRC, said:
“Shop price inflation fell to its lowest level of 2023 and, for the first time in two years, prices fell compared to the previous month. Leading the cuts was clothing and footwear, where retailers mitigated wet weather with larger discounts. Food price inflation also slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals.
“These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead. Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India are dark clouds on the horizon. We expect some global commodity prices to rise again as a result, and food prices will be slower to fall. Retailers continue working hard to keep falling prices on track. Government must also play its part and freeze business rates from next April, or else risk adding a £400m additional pressure on prices.”
The Economy: Stagnation Continues
Headline Statistics:
- GDP remains remains flat, at 0.1% for Q1, 2023, unchanged from 0.1% in Q4 2022
- The Consumer Price Index remained at 8.7% in May, unchanged from 8.7% in April.
- The BRC-KPMG measure of retail sales slowed slightly to 3.9% in June, from the 5.1% growth seen in the preceding month.
Commentary
Harvir Dhillon, Economist at the British Retail Consortium, said:
“Inflation is stubbornly high in the UK, remaining unchanged at 8.7%, once more a slower pace of disinflation than the Bank of England had originally estimated. This prompted a strong interest rate rise by the Monetary Policy Committee, and the Bank Rate now stands at 5%.
Retail performance has held up beyond expectations over H1 2023, with sales volumes even managing to see growth in some months, despite the difficult inflationary backdrop. Services inflation is now ramping up and will become a bigger focus in the Consumer Price Index (CPI) figures, as food and energy inflation start to ease. However, higher wage settlements are resulting in input costs remaining elevated, which will imply slower disinflation.
Stubborn inflation hits consumer spending across most channels, whether grocery, utility or housing. Sustained wage pressures, moreover, will offer some reprieve to working households, and buoy demand within the economy. We expect growth to broadly remain flat over the coming year, and this stagnation is likely to continue into 2024. Inflationary pressures continue to become embedded in the economy and the latest re- acceleration in wage growth suggests that there is a higher risk of further tightening in monetary policy.”
Retail Sales: An Encouraging Return To Form
Overview:
Following May’s slowdown in retail sales, June saw a rebound to a similar level to that seen in the previous few months, with 4.9% on a Total basis. This return to form is encouraging for retailers, as there was a considerable level of consternation heading into the summer as to whether sales would tail off for seasonal goods. Thankfully, the return of hot weather for the majority of the month encouraged people to visit the shops and splash out.
Commentary
Helen Dickinson OBE, Chief Executive of the BRC, said:
| “Retail sales growth ticked up slightly in June as hot weather prompted purchases of summer essentials. Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day. People were much more cautious about big-ticket purchases like furniture and technology equipment.
“Consumer confidence remains fragile. But, with headline food inflation easing for two months in a row as prices of essentials start to fall thanks to stiff competition and consumers continuing to shift shopping patterns to mitigate as much inflation as they can, confidence could improve. However,retailers’ efforts to bring down prices could be derailed by costly reforms to the packaging levy (Extended Producer Responsibility) and a new deposit return scheme putting an inflationary £4bn burden on retailers. A hike to business rates is also on the cards for next April. Government must look at how these costly policies will impact inflation and consumers and think again.” |
