In July, food and drink led high street sales as overall retail figures slowed due to adverse weather conditions.
- The British Retail Consortium (BRC) reports a 1.5% growth in total UK retail sales, a decrease compared to last year.
- Food sales increased by 8.4%, surpassing the 12-month average, as inflation showed a slight decline.
- Non-food sales dropped by 0.5%, negatively impacting retail performance over the three months to July.
- Online sales declined nearly 7% year-on-year, with limited categories such as furniture performing well.
In July, food and drink emerged as the leading categories in high street sales, despite a slowdown in overall retail performance. This trend coincided with damp weather conditions, which discouraged consumer spending in other areas. According to the British Retail Consortium (BRC), total UK retail sales grew by 1.5% over the four weeks to July 29, 2023. This growth rate marked a downturn from the previous year’s 2.3% increase and fell below the three-month average of 3.5%.
Food sales experienced a significant rise of 8.4%, which was above the 12-month average growth rate of 7.8%. This increase came as inflation slightly eased from its March peak of 19.2%. The robust performance in food sales indicates consumer prioritisation of essential goods even as economic conditions remain challenging.
Conversely, non-food sales diminished by 0.5% over the three months leading up to July, falling short of the 12-month total average growth of 0.6%. This decline was primarily attributed to the adverse weather, which hampered sales of seasonal goods such as clothing. Helen Dickinson, Chief Executive of BRC, remarked that the slowing pace of retail price inflation contributed to reduced sales in July, as well as the impact of inclement weather on consumer spending patterns.
Online sales continued their downward trajectory, decreasing by nearly 7% year-on-year. Only a few categories, including furniture, health, and beauty, showed resilience. The drop in online spending aligns with the ongoing shift back to physical stores following the Covid-19 pandemic, resulting in the lowest proportion of non-food sales online since then.
Shoppers are increasingly affected by ‘super-shrinkflation’, where prices rise while product sizes decrease, adding further pressure on consumer finances. Paul Martin, UK Head of Retail at KPMG, noted that retailers are intensifying promotional efforts to attract budget-conscious shoppers, which poses challenges to maintaining market share and profitability. Despite the cost-of-living crisis, UK consumers have shown resilience, but high inflation and rising interest rates may test their spending capacities in the foreseeable future.
The challenging retail environment in July underscores the resilience of UK consumers amidst economic pressures and changing shopping behaviours.
