In July, the retail sector experienced a shift as food and drink, alongside home items, emerged as top sellers, amidst a backdrop of slowing general sales. This occurrence is detailed in the latest British Retail Consortium (BRC) and KPMG report, highlighting key trends and consumer behaviors.
- The British Retail Consortium reported a modest increase in total UK retail sales by 1.5% during July.
- Food sales saw a significant jump, contrasting with a decline in non-food sales over the same period.
- Online retail faced a downward trend, continuing the shift back to physical stores.
- Shoppers are increasingly aware of promotions as economic pressures influence spending habits.
The British Retail Consortium’s latest figures showed a 1.5% rise in overall UK retail sales for the four weeks leading to July 29, marking a decline from the previous year’s 2.3% growth. This figure also fell below the three-month average of 3.5%. The performance indicates a cooling in consumer spending amid changing economic circumstances.
During this period, food sales surged by 8.4%, surpassing the 12-month average growth of 7.8%. This increase coincided with a slight easing in inflation from its March peak of 19.2%. In stark contrast, non-food sales witnessed a reduction of 0.5% across the three months ending in July, which remains below the 12-month growth average of 0.6%.
Online sales did not fare well either, declining by nearly 7% year-on-year, with few exceptions such as the furniture and health and beauty sectors. This trend is partly attributed to a consumer shift back to brick-and-mortar stores post-pandemic, as noted by BRC CEO Helen Dickinson.
Dickinson further stated, “The slowing pace of retail price inflation fed through into slower sales this July. Spend was further depressed by the damp weather, which did no favors to sales of clothing, and other seasonal goods.” Her insights underscore the challenges faced by retailers in adjusting to evolving consumer habits.
Retailers are actively increasing promotions to attract shoppers, with consumers increasingly scrutinizing value as inflation and interest rates rise. Paul Martin of KPMG remarked on the resilience of UK consumers amidst economic challenges, yet warned that continued inflation and high interest rates might affect consumer capability and willingness to spend throughout the year.
July’s retail dynamics reflect a complex interplay of economic factors influencing consumer behavior, notably favoring essential goods over discretionary spending.
