Retail Sales: Sales Subdued During Indian summer
The MIA’s Membership with the British Retail Consortium gives us access to an expanded portfolio of unbiased research and analysis to share with our members. Today, we’re providing key macroeconomic data from the UK economy, including sales growth, footfall and inflation.
Overview
In September, retail sales growth slumped to its second lowest rate of the year so far, falling to 2.7% on a Total basis year-on-year. This result was significantly below the longer-term 12-month average, which was in part due to the ever-falling inflation rate, but not reassuring news for the retail industry heading into the all-important ‘golden quarter’.
Headline Statistics:
- UK Total retail sales increased by 2.7% in September, against a growth of 2.2% in August 2022. This was level with the 3-month average growth of 2.7% and in line with the 12-month average growth of 2.7%.
- Food sales grew 7.4% on a Total basis over the three months to September. For the month of September, Food was in growth year-on-year.
- Non-Food sales decreased 1.2% on a Total basis over the three-months to September. This is below the 12-month average growth of 0.6%. For the month of September, Non-Food was in decline year-on-year.
- Over the three months to September, In-store Non-Food sales increased 0.3% on a Total basis since September 2022. This is below the 12-month average growth of 2.2%.
- Online Non-Food sales decreased by 3.6% in September, against a decline of 2.6% in September 2022. This was shallower than the 3-month and 12-month declines of 4.1%.
- The proportion of Non-Food items bought online (penetration rate) decreased marginally to 34.9% in August from 35.1% in September 2022.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:
“Sales growth in September slowed as the high cost of living continues to bear down on households. Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs. The Indian summer also meant sales of autumnal clothing, knitwear and coats, have yet to materialise.
“With sales volumes down, growth has been artificially boosted by high inflation over the last two years. As inflation eases, so too will longer-term sales growth prospects. The coming months are crucial for retailers as they enter the “Golden Quarter” and they’re investing heavily to support customers and bring prices down. However, such efforts are challenged by the £400m increase in business rates expected next year. The Chancellor should scrap the rates rise in his upcoming Budget and enable retailers to deliver more value for customers at such a critical time for the economy.”
Fresh Food inflation slows, Non-Food inflation eases
Headline Statistics:
- Shop Price annual inflation decelerated further to 6.2% in September, down from 6.9% in August. This is below the 3-month average rate of 6.8%. Shop price growth is at its lowest since September 2022.
- Non-Food inflation eased to 4.4% in September, down from 4.7% in August. This is below the 3-month average rate of 4.6%. Inflation is its lowest since December 2022.
- Fresh Food inflation slowed further in September, to 9.6%, down from 11.6% in August. This is below the 3-month average rate of 11.5% and inflation in this category remains elevated. Inflation is its lowest since July 2022.
- Ambient Food inflation decelerated to 104% in September, down from 11.3% in August. This is below the 3-month average rate of 11.2% and is its lowest since November 2022.
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:
“Food prices dropped on the previous month for the first time in over two years because of fierce competition between retailers. This brought year-on-year food inflation down to single digits and contributed to the fifth consecutive monthly fall in the headline rate, helped by easing cost pressures. Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month. Households also benefitted from price cuts for school uniforms and other back-to-school essentials.
We expect Shop Price Inflation to continue to fall over the rest of the year, however there are still many risks to this trend – high interest rates, climbing oil prices, global shortages of sugar, as well as the supply chain disruption from the war in Ukraine. Retailers will continue to doo all they can to support their customers and bring prices down, especially as households face being squeezed by higher energy and mortgage bills”
Consumer prudence impacts footfall
Overview
Retail footfall in 2023 has exhibited a fluctuating pattern, starting positively in January and February but gradually declining from March to April. May brought a significant shift with a sharp decrease, due to rising inflation and consumer expectations of price hikes. Footfall remained relatively stable with minor fluctuations from June to August, and July saw a minor recovery due to summer sales. However, August and September both witnessed declines, highlighting persistent economic challenges and consumer prudence in spending.
Key findings include:
- Total UK footfall decreased by 1.7% in September (YoY), compared to a decrease of 1.3% in August.
- High Street footfall decreased by 1.7% in August (YoY), down from +0.8% in August..
- Retail Park footfall fell by 2.4% in September (YoY), with no change from August.
- Shopping Centre footfall decreased by 4.0% in September (YoY), down from +0.2% in August..
Commentary:
Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:
“During the warmer-than-expected weather, footfall slowed in September, with fewer shoppers across all shopping locations. High streets and retail parks held up slightly better as the return to school helped increase the number of shopping visits at the start of the month. Retailers will want to invest in their properties in the run up to Christmas, but the prospect of a £400m increase to business rates next year will limit their capacity for improvements. The Chancellor should announce a freeze to rates at the Autumn Budget in November.”
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