Summer boost for retail sales hides weak underlying growth
Summer boost for retail sales hides weak underlying growth
- August produced the best total like-for-like sales growth since March 2023
- Total like-for-like sales grew by +3.8% compared to August 2022
- Online sales grew just +2.8%, barely offsetting last year’s decline
- However, BDO warns that sales growth is based on historically weak results in 2022
August recorded the strongest total like-for-like (LFL) discretionary spending sales growth since March 2023, but as the results are based on August 2022’s very low sales, it reflects another set of concerning numbers for the sector, according to accountancy and business advisory firm, BDO LLP.
BDO’s latest High Street Sales Tracker shows that total like-for-like sales in August grew +3.8% from last year’s disappointing base of +3.6% in August 2022. In-store LFL sales grew by +9.4% compared to August 2022, while online sales grew just +2.8%, which barely offset last year’s negative base of -0.6%.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “Although these figures may seem positive, they compare to a very weak period in August 2022, when the retail sector recorded its worst growth since the end of COVID-19 restrictions. Factoring in the rate of inflation, the figures also suggest a fairly significant decline in sales volumes. In this context, these results show the sector is failing to shake off sluggish growth rates, which is particularly concerning as we approach the vital autumn and winter trading period.”
Sector Results
The lifestyle sector emerged as the major winner from August’s sales figures, with sales up +4.4% as consumers splashed out on health and beauty products for their summer holidays. In-store sales were particularly strong, growing by an above inflation rate of +14.1% compared to the same period last year.
The fashion sector saw sales grow by +4.3% but this was mainly driven by online performance, as store sales grew by just +2.8%. The homewares sector continued its poor performance with growth of +4.9%, which failed to offset a very low base in 2022 of -6.4%.
Sophie continued:
“Positive economic news such as falling inflation and rising wages may have buoyed consumer confidence and explain some of the growth we’ve seen, particularly in the lifestyle category. However, with business confidence declining and investment tightening - and with another possible interest rate hike in September - this may well increase the sense of ‘doom and gloom’ among retailers. The period from now through to Christmas is the critical trading period for retailers, and these results certainly don’t give them much cause for optimism as they approach the so-called ‘Golden Quarter’.”
ENDS
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