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Retail Sales: Growth returns as summer wraps up
Overview
Retail sales rebounded in August, following the slump in July, recording 4.1% on a Total basis that was more in line with the trend seen throughout much of the year so far. While the difference in weather conditions between this period and the same point last year was less than a month ago, the country hardly experienced a return to traditionally high temperatures and was certainly not bathed in sunshine in August. This continued to hamper the fashion industry most of all.
Headline Statistics:
- UK Total retail sales increased by 4.1% in August, against a growth of 1.0% in August 2022. This was above the 3-month average growth of 3.6% and in line with the 12-month average growth of 4.1%.
- Food sales increased 8.2% on a Total basis over the three months to August. This is above the 12-month average growth of 8.0%. For the month of August, Food was in growth year-on-year.
- Non-Food sales decreased 0.2% on a Total basis over the three-months to August. This is below the 12-month average growth of 0.9%. For the month of August, Non-Food was in growth year-on-year.
- Over the three months to August, In-store Non-Food sales increased 1.3% on a Total basis since August 2022. This is below the 12-month average growth of 3.6%.
- Online Non-Food sales decreased by 1.7% in August, against a decline of 6.1% in August 2022. This was shallower than the 3-month and 12-month declines of 3.1%.
- The proportion of Non-Food items bought online (penetration rate) decreased to 34.1% in August from 34.7% in August 2022.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:
“Retail sales in August improved, particularly on July’s poor performance. Sale of non-food products had their best month since February, particularly for health and beauty products as retailers continued to invest in new, exciting brands, and customers splurged on self-care. The sales figures reflected the improvement in consumer confidence in August, and retailers hope this general upwards trend will carry on. Not all areas benefitted, clothing and footwear saw weaker growth as families held back spending on children’s uniforms and other back-to-school goods until the last minute.”
“Easing inflation will certainly be welcomed by consumers, but as the rate of price rises falls, so will the extra spending needed by consumers. As a result, sales growth may fall in the coming months, even if volume growth does not. Furthermore, high interest rates and high winter energy bills will put pressure on many households to spend cautiously. Retailers are combatting this through a clear focus on great value for consumers, expanding budget ranges, and finding ways to cut costs where possible.”
Fresh food inflation slows, Non-Food inflation remains unchanged
Headline Statistics:
- Shop Price annual inflation decelerated further to 6.9% in August, down from 7.6% in July. This is below the 3-month average rate of 7.7%. Shop price growth is at its lowest since October 2022.
- Non-Food inflation remained unchanged at 4.7% in August. This is below the 3-month average rate of 5.0%. Inflation is its lowest since December 2022.
- Food inflation decelerated to 11.5% in August, down from 13.1% in July. This is below the 3-month average rate of 13.1% and is the fourth consecutive deceleration in the food category. Inflation is its lowest since September 2022.
- Fresh Food inflation slowed further in August, to 11.6%, down from 14.3% in July. This is below the 3-month average rate of 13.8% and inflation in this category remains elevated. Inflation is its lowest since August 2022.
- Ambient Food inflation decelerated to 11.3% in August, down from 12.3% in July. This is below the 3-month average rate of 12.2% and is the lowest since January 2023.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:
“Better news for consumers as shop price inflation in August eased to its lowest level since October 2022. This was driven by falling food inflation, particularly for fresh produce such as meat, potatoes and some cooking oils. These figures would have been lower still had the Government not increased alcohol duties earlier this month. Across Non-Food categories, toiletries and cosmetics saw price growth ease as many key components became cheaper, meanwhile inflation for clothing and footwear increased as retailers unwound their extensive summer sales.
“While inflation is on course to continue to fall thanks to retailers’ efforts, there are supply chain risks for retailers to navigate. Russia’s withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation. A potential £400m hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the Chancellor intervenes.”
Sunless Summer sinks Footfall
Overview
In August 2023, footfall fell compared to last year, following fluctuations in preceding months. Notably, January and February saw strong growth, while the pace slowed in March and April. Subsequently, May and June saw footfall decline compared to the previous year. However, July showed a slight recovery, indicating positive shifts in consumer behaviour. The trend continued in August, with a slight decrease.
Key findings include:
- Total UK footfall decreased by 1.6% in August (YoY), down from +1.8% in July.
- High Street footfall decreased by 0.9% in August (YoY), down from +1.6% in July.
- Retail Park footfall was unchanged at 0.0% in August (YoY), down from +1.4% in July.
- Shopping Centre footfall decreased by 3.8% in August (YoY), down from +0.2% in July.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:
“Footfall took a turn for the worse in August as the summer sun failed to materialise. The impact was made worse when compared to last year’s heatwave, where many shoppers rushed to the shops to buy clothing, BBQs and other outdoor essentials. This month it was shopping centres that took the biggest hit, while high streets were also significantly down on last year.
“The rise in tourism, which returned to pre-Covid levels last month, did not help key shopping destinations. Government should re-introduce a tax-free shopping scheme to attract international shoppers, who are currently choosing other destinations. Unless action is taken, the UK remains the only European country without a VAT-free shopping scheme.”
MIA Members can get in touch to see any of these reports in full.
