Valentine’s Boost Fails to Offset Inflation as Volume Sales Continue to Fall
Valentine’s Boost Fails to Offset Inflation as Volume Sales Continue to Fall
- Total retail like-for-like sales grew by +6.4% compared to February 2022.
- Week three of the month saw strongest in-store sales so far in 2023.
- Online sales fell by -1.2% from a negative base in February 2022, indicating preference for "brick-and-mortar" shopping.
- Retailers face increasing challenges to generate customer demand for discretionary items as essential spend takes a larger share.
February saw a four-week run of positive total like-for-like (LFL) retail sales and a continued twenty-four-month positive streak, according to new data revealed by accountancy and business advisory firm BDO LLP.
However, sales failed for the sixth time since July 2022 to offset the UK's high rate of inflation, and as households continue to feel the squeeze of rising prices Brits are spending less on discretionary items and making increasingly more considered purchases.
According to BDO’s High Street Sales Tracker (HSST), total LFL sales, combined in-store and online, rose by 6.4% in February. Total in-store LFLs climbed by +11.3% in the month, from a strong base in February 2022, when figures were rebounding from the 2021 lockdown.
However, February marked another disappointing month for online sales, with total non-store LFLs falling into the red for the first time since September 2022, dropping by -1.2% from last year’s negative base of -19.4%.
February began with total LFLs jumping +10.17% in the first week of the month, with a slightly smaller growth of +2.84% in the second. In the third week, which included Valentine’s Day and the Spring half-term break, LFLs grew by +10.24%. The week also saw the strongest in-store sales so far in 2023, with double-digit growth across all three categories (lifestyle, fashion and homeware). The month ended on a positive note, with total LFL sales growing by a steady +6.86%.
Sector Results
Total LFLs for the fashion sector climbed by +10.3% throughout February, marking the twenty-fourth consecutive month of positive total LFLs for the sector. In-store LFLs also saw a strong performance, jumping +11.3%.
Lifestyle total LFL sales grew by +6.5% in February, marking the category’s third consecutive month of positive results. In-store LFLs for lifestyle were also positive throughout the month, with a growth of +11.6%.
February marked another disappointing month for the homeware sector. Total LFL sales fell by -0.4% from a base of +5.4% in the corresponding month last year. However, it wasn’t all bad news. In-store homeware LFL sales rose by +10.2% this month, indicating the category’s strongest result since April 2022.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, said:
“In the short month of February, it’s positive to see total LFL figures increasing across the weeks. However, critically these figures simply do not absorb the high rate of inflation.
“It’s interesting to see that in-store sales have again performed well across the month. In contrast, we have seen a fall in online sales in absolute monetary value leading to an even higher fall in volumes when factoring in inflation. This continued preference for a bricks and mortar experience instead of online points to shoppers not only making more considered purchases, but also perhaps avoiding costly postage and returns charges and further tightening their belts wherever they can.
“Retailers are also faced with a consumer who arguably is starting to shift their spending priorities. Rising costs for essential spend such as the weekly food items, but also increases in mortgage payments, will be taking up much more of the consumer purse, leaving shoppers having a sharper focus on what discretionary spend they have on other categories. Reports show an increase on international travel and perhaps in the first winter of lockdowns removed, the consumer has saved their purse for experiences. So, as discretionary items fall even lower down the household priority list, retailers will have to work hard in order to shift stock and generate working capital to ensure that they are able to refresh their product offering to attract that tightening purse.”
ENDS
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