UK retailers ‘need more than sunshine to get back on their feet’

UK retail sales rose by 0.3% in July, against an increase of 1.6% in July 2018, according to the BRC and KPMG. This is the lowest figure recorded for the month since their records began in 1995 and comes after the worst June on record.

It has been a punishing few months for the industry, Helen Dickinson, Chief Executive, British Retail Consortium, observes. A combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.

“Whereas last year’s glorious sunshine and World Cup Finals led to strong consumer demand over the summer, this year has been weak in comparison, with both June and July showing the lowest sales on record for their respective months. And it is not just High Streets that are suffering, with non-food online growth also one percentage point below the 12-month average,” Dickinson comments.

“The challenging retail environment is taking its toll on many High Street brands who must contend with rising import costs, a multitude of public policy costs, and ever higher business rates. A coherent strategy for retail is needed. The government should freeze future business rates rises and fix the appeals system before embarking on a wholesale reform of this broken tax system.”

While any growth is welcome after two months of decline, it’s clear that most players need more than sunshine to get back on their feet, adds Paul Martin, UK Head of Retail, KPMG.

“Given the weather it’s unsurprising that shoppers reconsidered their wardrobe, but it was online retailers who benefitted most once again. Online non-food sales overall actually grew by only 3.7%, which is considerably lower than previous years. Meanwhile, another category which has historically benefitted from the good weather is grocery, but even here sales are lacklustre, which is a cause for concern,” he says.

“With consumer confidence holding up in the face of prolonged Brexit uncertainly, shoppers are notably disengaged overall. The pressure continues to build between online and physical offerings, costs continues to rise and the demands of consumers continue to grow. The key question is, who can handle the heat?”