Rising UK sales not enough to fend off job cuts and store closures as retailers face £7 billion budget bombshell

UK total retail sales increased by 2.5% year on year in July, against a growth of 0.5% in July 2024. This was above the 12-month average growth of 1.9%, according to BRC and KPMG research.

With sales growth at these levels, it is barely touching the sides of covering the £7 billion new costs imposed on retailers at the last budget, the British Retail Consortium argues.

It says that, if the upcoming autumn budget sees more taxes levied on retailers’ shoulders many will be forced to make difficult choices about the future of stores and jobs, and ongoing pressure would push prices higher. Ultimately, this means more families struggling, particularly those on lower incomes, reduced consumer spending and a drag on economic growth.

Food sales did well in early July thanks to warm weather and a packed sporting schedule, though this momentum failed to hold for the rest of the month. Rising food inflation meant increased spending was more a result of higher prices than improved demand.

Fashion sold well early in the month, but deteriorated as weather worsened, while homeware and indoor furniture grew steadily, recovering from the previous year’s decline. Gaming and toys fared particularly well, as nostalgic adults purchased products like Lego.

Linda Ellett, UK Head of Consumer, Retail & Leisure, KPMG, says: “The UK’s fifth warmest July on Met Office record brought a boost to home appliance and food and drink sales.  But rising inflation was also a driver of the latter and monthly non-food sales are only growing at around 1% on average at present. With employment costs having risen and inflation both a business and consumer side pressure, it remains a challenging trading environment for many retailers."

“While the majority of consumers that KPMG surveys are confident in their ability to balance their monthly household budgets, big ticket purchases are more considered in the context of rising essential costs and ongoing caution about the economy and labour market. Holidays are the priority for many this summer but those heading away have had to account for a higher cost of travel.  Consequently, spending in some areas of the retail sector remains subdued and competition for consumer spend will remain fierce.”

Sarah Bradbury, CEO, IGD, says: “July’s shopper confidence fell to zero for the first time since April, cooling alongside the weather despite boosts from Wimbledon and the Lionesses’ win. More households are feeling the pinch yet trust in the industry rose by three points.”

“With food price inflation climbing to 4.5% and economic uncertainty growing, shoppers face a tough outlook. Own label products continue to outperform brands, but modest volume growth shows inflation is masking any gains. A potential interest rate cut, and a sunny bank holiday could offer a much needed boost at the end of the summer.”

2025 RTIH INNOVATION AWARDS

UK retail will be a key focus area at the 2025 RTIH Innovation Awards.

The awards. which are now open for entries, celebrate global tech innovation in a fast moving omnichannel world.

Our 2024 hall of fame entrants were revealed during an event which took place at RIBA’s 66 Portland Place HQ in Central London on 21st November, and consisted of a drinks reception, three course meal, and awards ceremony presided over by comedian Lucy Porter.

In his welcome speech, Scott Thompson, Founder and Editor, RTIH, said: “The event is now into its sixth year and what a journey it has been. The awards started life as an online only affair during the Covid outbreak, before launching as a small scale in real life event and growing year on year to the point where we’re now selling out this fine, historic venue.”

He added: “Congratulations to all of our finalists. Many submissions did not make it through to the final stage, and getting to this point is no mean feat. Checkout-free stores, automated supply chains, immersive experiences, on-demand delivery, next generation loyalty offerings, inclusive retail, green technology. We’ve got all the cool stuff covered this evening.”

“But just importantly we’ve got lots of great examples of companies taking innovative tech and making it usable in everyday operations - resulting in more efficiency and profitability in all areas.”

Congratulations to our 2024 winners, and a big thank you to our sponsors, judging panel, the legend that is Lucy Porter, and all those who attended November's gathering. 

For further information on the 2025 RTIH Innovation Awards, please fill in the below form and we will get back to you asap.