High street sales grew by slightly more than inflation in January, new research suggests, while online sales moved back into positive territory – but failed to keep up with inflation.
Retail sales grew by 10.9% on a like-for-like basis (LFL) that strips out the effect of store openings and closures, according to BDO’s High Street Sales Tracker for January. That’s marginally her of inflation at 10.5%. Within the high street figures, in-store LFL sales grew by a strong 19.5% in January, compared to a year earlier. But online sales showed slower growth (+4.1%) from last January, when they had fallen by 2.7% on the previous year.
Sophie Michael, head of retail and wholesale at business advisers BDO LLP, says: “Although these results look positive at first glance, they are masking a very different picture, with our +10.9% figure for total LFLs only slightly higher than the 10.5% inflation rate. What we can see is that perhaps many consumers postponed December spending in order to wait for the January sales to try and bag a bargain and make their money go further.
“There is a positive given the strong in-store figures pointing to the return of the high street. This perhaps demonstrates also that each purchase of non-discretionary spend is more considered given the tighter consumer purse resulting in people wanting to see the item before committing. As the gap between consumer wages and inflation continues to grow, and essential spend takes a greater share of the purse, consumers are far more selective, and retailers will be having to work harder to differentiate their offering through product and value.
“With inflation impacting costs across all sectors, including food in particular, we are expecting to see discretionary spending fall across the year as consumers prioritise essential spending. Given the expected downturn in discretionary spend, retailers will therefore be focused on managing working capital and inventory levels, all within an inflationary environment.”
By week and by category
The first week of January saw the strongest year-on-year LFL growth (+14.62%), and continued to grow in the growth second (+13.67% YOY), third (+12.79%), fourth (+11.96%) and fifth (10.20%) weeks.
Fashion sales saw the strongest growth (+20.1%), with the category reporting LFL growth for the 23rd month in a row – particularly in-store (+26.1%). Lifestyle sales grew by 7.6% LFL, and by 16.7% in-store. But homewares sales fell by 5.4%, reflecting poor online sales and a slow 2.1% growth in-store.
