- Retail sales down 1.2% in July compared to previous month
- Food sales also down as price pressures remained high
- Online stores boosted as shoppers chose to shop from home
Danni Hewson, head of financial analysis at AJ Bell, comments on the latest retail sales figures:
“The Great British washout dealt a huge blow to retailers as would be shoppers shunned soggy high streets. Unseasonably wet and cold weather meant there was no need for new summer togs as people instead ferreted out winter jackets if they were brave enough to leave the house at all.
“Online retailers enjoyed something of a boost as people chose to do what little shopping they required from the comfort of their homes, but even then cost-of-living pressures were acutely apparent.
“Promotions and offers were prolific as competition for every one of our hard-earned pounds remained fierce.
“And with food inflation still stingingly high food sales were also down as the opportunity for picnics and barbecues vanished in the drizzle.
“July’s retail slump follows three positive months for the sector and there is every indication that consumers do still have cash to spend, they’re just choosing where and when to spend it very carefully.
“With ‘Barbenheimer’ offering something for everyone at the cinema and Mecca Bingo owner Rank updating markets to say they’d enjoyed a big spike in revenues since the showers began, it seems people took the opportunity to splurge on experiences rather than stuff.
“A bit more sunshine and the potential of a World Cup victory is likely to re-frame the numbers.
“Slowing retail sales would normally be seen as a sign of consumer stress, but this feels more like a weather related blip and it’s unlikely the Bank of England will give these numbers anything more than a cursory glance when it comes to next month’s interest rate decision.”
Silvia Rindone, EY UK&I Retail Lead comments on today’s ONS retail sales figures for July 2023:
“The UK’s unusually wet summer continued to affect retail sales in July as consumers avoided the high streets and retail parks, and had less cause for summer spending.
“Sales volumes fell by 1.2% month-on-month in July – a fall of 3.2% on 2022’s July figures, while spending was down 1% from June too. Clothing was among the most affected, as the wet weather meant there was little encouragement for purchasing new summer clothes. Cost of living pressures will have had an impact on food sales too.
“Despite a slow July, retailers should see sales improve in August as families start shopping for the start of the new school year in September. ‘Back to school’ is often the highest spending season in retail after Christmas.
“Amid continued cost-of-living pressures, many shoppers will still be looking for bargains or making the most of private label goods. EY’s latest Future Consumer Index found that affordability continues to be at the top of consumers’ minds, with 43% stating it is a key decision when making a purchase and 80% willing to buy private label goods.
“Many homeowners are also worried about rising mortgage rates, which will inevitably lead to further pressures on discretionary spending as consumers look to cover the increase in household bills.
“However, there is positive news, with UK grocery inflation easing for the fifth consecutive month in July, down 2.2 percentage points from the previous month. Shoppers will see the cost of food essentials fall marginally when compared with prices earlier this year, a welcome change after months of rising costs, which could positively affect volumes as well as overall sales.
“This year, retailers have had to remain vigilant of the economic factors affecting discretionary spending – factors that have changed on a monthly basis. This planning and agility will need to continue as consumers once again re-evaluate their spending habits. While there may be a temptation to keep prices elevated in order to recoup any losses from earlier in the year, this could hurt sales volumes as consumers cut back on non-essentials.”