Retail sales cool amid heatwave

Retail sales growth cooled down last month as a surge in food and drink sales prompted by the heatwave failed to offset a wider slowdown in consumer spending

According to the monthly BRC-KPMG Retail Sales Monitor, retail sales increased by 0.5 per cent in July on a like-for-like basis when compared to the 1.1 per cent like-for-likes rise in June.

It’s also not as good as July 2017, when sales grew 0.9 per cent on a like-for-like basis.

On a total basis, sales increased 1.6 per cent in July, also a dramatic slowdown compared to the 2.3 per cent total sales growth recorded in June.

However, on a year-on-year basis, this month’s total sales is an improvement on the 1.4 per cent of growth recorded in July 2017.

The latest figures comes after a bumper two months of summer sales growth, with the World Cup fever and warm sunny spell prompting a surge in beer, barbecues and big TV sales.

“Last month’s sweltering temperatures kept shoppers focused on eating, drinking and keeping cool,” BRC chief executive Helen Dickinson said.

“Food sales had their best July in five years, while fans and cooling equipment flew off the shelves.

“However, total sales growth slowed as the heat laid bare the underlying weakness in consumer spending.

“Sales of non-food products struggled, three months into an extended period of summer weather, demand for many seasonal purchases has slowed while the heat has kept shoppers away from days spent browsing new ranges.

“For many in the industry, autumn could not come sooner.”

Meanwhile over the three months to July, in-store sales of non-food items declined one per cent on a total basis and 2.4 per cent on a like-for-like basis.

This is higher than the 12-month total average decline of 2.5 per cent and the best total three-month average since June 2017.

Over the three months to July, food sales increased 3.1 per cent on a like-for-like basis and 4.5 per cent on a total basis.

This is above the 12-month total average growth of 3.8 per cent and the monthly performance was the highest since July 2013, excluding Easter distortions.

Non-food retail sales over the three months to July increased 0.2 per cent on a like-for-like basis and 1.2 per cent on a total basis.

This is higher than the 12-month total average decrease of 0.2 per cent and the best three-month average since June 2017.

Over at online retail, sales of non-food products grew 7.5 per cent in July, against a growth of 8.3 per cent in July 2017.

This is below the three-month and 12-month averages of 9.2 per cent and 7.9 per cent respectively.

Online penetration rate increased from 22.4 per cent in July 2017 to 24.1 per cent in July 2018.

This is below the three-month average of 2.7 per cent, but in line with the 12-month average of 1.6 per cent.

“Although the weather generates a shift in month-to-month spending, trend growth remains very low by historical standards,” Dickinson said.

“Physical stores have been particularly affected by pressures on consumers while costs borne by retailers have continued to rise.

“Over the last year, in-store sales of non-food products fell 2.5 per cent, at the same time as business rates bills increased nearly 3 per cent.

“Although changing consumer behaviour means we will have fewer shops in future, the reality is that if we want to support a positive reinvention of our high streets, business rates cannot go on increasing.”

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