UK retail sales grew in July as shoppers spent more in-store and less online than a year earlier, new figures from the BRC suggest. Online, non-food sales fell – but at a slower rate than in previous months – according to the July 2022 BRC-KPMG Retail Sales Monitor. Almost four in 10 non-food sales took place online, despite a small year-on-year fall in the proportion of sales taking place online.
UK retail sales across all channels grew by 2.3% in July in total compared to a year earlier, when sales had risen by 6.4% from the previous year. That’s below the 12-month average (+ 2.7%). On a like-for-like basis, which strips out the effect of store – and business – openings and closures, sales were 1.6% ahead of last year.
How shoppers spent across channels
Online non-food sales fell by 3.9% in July, having fallen by 0.6% a year earlier. However, that’s ahead of the longer term trends of decline both over three months (-7.3%) and 12 months (-14.1%). Some 39.5% of non-food sales took place online, down from 42.3% a year earlier.
In-store non-food sales grew by 2% in total and by 1.2% LFL.
“Sales improved in July as the heatwave boosted sales of hot weather essentials,” says Helen Dickinson, chief executive of the British Retail Consortium (BRC). “Summer clothing, picnic treats and electric fans all benefitted from the record temperatures as consumers made the most of the sunshine. However, with inflation at over 9% many retailers are still contending with falling sales volumes during what remains an incredibly difficult trading period.
“Consumer confidence remains weak, and the rise in interest rates coupled with talk of recession will do little to improve the situation. The Bank of England now expects inflation to reach over 13% in October when energy bills rise again, further tightening the screws of struggling households. This means that both consumers and retailers are in for a rocky road throughout the rest of 2022.”
Food vs non-food sales
In the three months to July, food sales grew by 2.3% in total and 1.8% LFL. Over the same period, non-food retail sales fell by 2% in total and by 2.5% LFL – below the 12 month average of 4.5%. But in July alone, non-food sales grew compared to last year.
Paul Martin, UK head of retail at KPMG, says: “The sun came out for retailers in July, as like-for-lie sales grew 1.6% on last year. Against a backdrop of the cost of living crisis and ongoing reports of low consumer confidence actual sales are still holding up. Online retailers also saw the benefit of warmer weather wit sales growth falling more slowly, by just 3.9% on July 2021.
“Despite consumer polls suggesting confidence is at an all-time low, this hasn’t translated to money not being spent at the tills, as consumers are determined to enjoy delayed holidays and an unrestricted summer. Pent up demand, especially for new clothes, has so far been at significant enough levels to keep the overall retail sector in relatively good health. With travel and summer socialising back on the agenda, retailers will be hoping the feel good factor continues into August.
“However, the summer could be the lull before the storm, with conditions set to get tougher as consumers arrive back from summer breaks to holiday credit card bills, another energy price hike and rising interest rates. With stronger cost of living headwinds on the horizon, consumers will have to prioritise essentials, and discretionary product spending will come under pressure. As margins continue to be challenged, and costs continuing to rise, a significant drop in demand come the Autumn will have detrimental impact on the health of the retail sector. Truly understanding individual customer buying patterns and being able to differentiate these will become increasingly more important for the sector.”
