Home Business News Damp July brings tale of two halves for retail sales

Damp July brings tale of two halves for retail sales

by LLB Finance Reporter
4th Aug 23 7:04 am

Following a sustained run of poor like-for-like (LFL) retail sales growth across the last 12 months, July has seen a small increase in sales, according to new data from accountancy and business advisory firm, BDO LLP.

According to BDO’s latest High Street Sales Tracker, total like-for-like sales in July grew +3.6%, compared to July 2022. In-store LFL sales grew by +6.3% and non-store sales by +4.5%, based on the same period last year. However, in the final two weeks of the month sales declined significantly, recording falls of -0.55% and -0.42% respectively compared to the same weeks last year.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “Although these figures highlight a small increase in sales in July, this really has been a month of two halves. The growth in the first half of the month was still below inflation rates, meaning sales volumes are still significantly down. The second half of the month saw sales going backwards, declining compared to last year.

“The first couple of weeks of July saw higher levels of discretionary spending, encouraged by some heavy discounting in the fashion sector and consumers making purchasing ahead of the schools breaking up for summer, but sales in the latter half of the month were likely dampened by more people travelling on holiday and the unseasonably wet weather.”

Sector results

Following several months of bad results, the homewares sector continued to perform poorly in July, recording just +0.9% LFL sales growth from a very low base of -6.0%.

However, the fashion sector recorded modest growth, with LFL sales increasing by +3.0% over the same month last year. In-store fashion LFLs fell by -0.3%, dragged down by negative sales in weeks three and four of the month.

The lifestyle sector was the strongest performing category, with total LFLs growing by +7.1% this month from a base of +11.6%. Likely prompted by holiday spending, in-store lifestyle sales were strong throughout July, achieving some of the sector’s strongest growth since March.

Sophie continued, “Retailers continue to face challenging trading conditions with no signs of an immediate recovery. Having recorded poor sales growth in the final two weeks of July, retailers now head into August, when UK discretionary spending typically slows down.

“However, with data showing that the number of overseas tourists is now above pre-pandemic levels, this may offer a lifeline to retailers, particularly those in major cities who will be relying on them to make up the discretionary spending shortfall. With many retailers calling on the government to reinstate tax-free shopping for overseas visitors, this could be one way of providing a significant boost to the sector.”

“However, even if tourist spending boosts sales growth and volumes in the short term, retailers are now gearing up for their critical fourth quarter trading period. They have discounted heavily over the summer to support sales, which is putting huge pressure on their margins, but this is unsustainable.

“Navigating a period of high interest rates and high inflation while maintaining sales will be incredibly challenging. Now more than ever will retailers need to focus on accurate forecasting and managing their working capital and product offering in order to succeed.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]