Online retail far outshone the high street in July, with physical stores reporting sales growth of just 0.8%, according to BDO’s latest High Street Sales Tracker. Online sales rose by +8.3% compared to July 2024.
Total like-for-like retail sales in-store and online grew by +2.8% in the month. That compares to a base +3.0% in July 2024.
The instore sales slump is the seventh month in a row that instore sales have been lower. BDO says it reflects the sector’s ongoing struggle to get shoppers out onto the high street and spending money. However, July’s heatwaves may have prompted some to shop online rather than brave physical stores. This seems particularly evident in fashion where ecommerce sales grew by 10.1% compared to in-store sales growth just 1.3%.
Limited spending capability
Sophie Michael, head of retail and wholesale at BDO, warned that consumers are faced with limited spending capability which is impacting the high street. “Consumers are under huge pressure,” she said. “Food inflation remains stubbornly high and this is leaving shoppers with very little disposable income for non-essential spend.”
“We naturally expect retail sales to be challenging during the school holidays as families fly overseas and prioritise disposable income in spending on experiences and social activities. But this month’s figures point both to a longer-term trend – the strengthening of online retail’s supremacy over the high street – and the economic challenges the UK is facing.”
Deal-hunting
BDO says the online sales growth was likely also influenced by shoppers’ ability to use the channel to find the best deals. She said product and brand discovery also remains vital. “There have also been recent reports of the return of the ‘lipstick effect’ on consumers as they look to small, affordable treats like lipstick to lift their mood during an economic squeeze. By offering affordable, luxury items, retailers may be able to attract the consumer in for larger spends. August may be a difficult month to ramp up sales, but retailers need to do everything they can to convert summer stock to sales revenue.”
Earlier this week, fashion retailer Next announced a 9.5% growth in online sales for the quarter.
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