Retail sales fell 1.6% in August, figures out today showed.
Sales fell across all sectors including online and over 3 months volumes fell 5.1% but value rose by 5.6% suggesting price growth of 10.7%.
Danni Hewson, AJ Bell financial analyst, comments on the August retail sales figures: “People are clearly thinking hard about what they spend their money on. It’s just not stretching as far as it used to, and essentials have to come first. But even essentials are costing more and with the spectre of unmanageable fuel bills looming large people did the only thing they could, cut back.
“All sectors experienced a fall in sales, but it was online that really felt the squeeze as the previous month’s promotions came to an end. Retailers have to make money and if they cut prices too much, even if volumes increase, shareholders will balk. But it’s a balancing act, there’s no point in sitting on vast quantities of merchandise that’s heading past its sell by date. Fashion is brutal, whether it’s delivered by post or if shoppers have to use their own two feet, but the new season has already provided a boost for H&M and now the government has offered households a lifeline when it comes to energy prices, retailers will be hoping consumers have renewed confidence as we head into the “golden quarter”.
“But the energy price intervention won’t be a panacea and retailers face their own agonising wait to discover exactly how their cushion will work. And it’s only for six months, though there will be further help beyond that period for vulnerable sectors. Some businesses have already decided the uncertainty is too much to take. While food sales have been down across the board, it’s speciality retailers like bakers and butchers that have experienced the greatest fall in sales. We’ve heard over and over again that people are turning to value options and artisan products might now be considered a luxury too far by many shoppers. For these businesses the USP is quality and quality comes at a premium. Many are also stuck with high energy costs, ovens and fridges can’t simply be turned off so cutting costs is not the answer with the questions mounting up.
“Big ticket purchases are being put off and that’s unlikely to change in the coming months. Even if inflation does begin to cool significantly, it doesn’t mean prices aren’t still rising and the hikes already implemented won’t just be reversed. The cost-of-just living has become dearer. For some it’s become unaffordable, for many others it’s become troublesome. With the expectation of further interest rate rises, with the nights drawing in and recession on the horizon, retail sales are likely to be under ever increasing pressure. People will still spend this Christmas, but they’ll do it thoughtfully and retailers will have to slug it out for our hard-won cash with the hospitality sector. After last year’s disappointments, people will want to socialise and they’ll want to take a beat to put their troubles aside and share a pint and laugh with family and friends.”