Retail spending fell back in June to levels last seen in the “depths of the pandemic”, as shoppers cut back on non-food purchases, the latest British Retail Consortium (BRC) figures suggest. Online sales fell at the same time, as shoppers put off home-related purchases, from furniture and home appliances to computing.
Retail sales were 1% lower than a year earlier, while the proportion of non-food sales taking place online fell below 40%, according to the latest BRC-KPMG Retail Sales Monitor for the month.
Meanwhile, Barclaycard says that card spending grew by 6.2% in June, year-on-year, with spending on essential items up by 4.4% as fuel prices rose.
How shoppers bought online
Online shoppers spent 9.1% less than last year on non-food products in June, according to the BRC index. Last June, they had spent 5.9% less than the year before. However, the decline in online shopping stayed ahead of the three month average decline (-10.3%). Some 39.4% of UK retail sales took place online in June, according to BRC figures – down from 43.3% last June.
The fall in online spending came as in-store spending on non-food items rose by 2.2% in total and by 0.6% LFL.
Paul Martin, UK head of retail at KPMG, says that the fall in retail sales – for the third month in a row – came as prices rose to an unprecedented extent on the high street.
“Online shopping continued to move in reverse with total sales down 9% as non-food purchases related to the home, such as furniture, home appliances and computing, suffered the biggest falls in online spending,” he says.
How shoppers bought across channels
Shoppers spent 1% less on retail sales in total in June than they did a year earlier,. Last June they increased spending by 10.4%. In June, spending was lower than the longer-term trend over both three (-0.8%) and 12 months (+3%). They also spent 1.3% less on a like-for-like basis that strips out the effect of store openings and closures.
Non-food spending fell by 3.3% in total in the three months to June, and by 4.2% LFL. Non-food spending was down year-on-year compared to last June – while spending on food grew. Food sales grew by 2.2% in total – above the 12-month average (+0.6%) – and by 1.6% LFL.
Helen Dickinson, chief executive of the BRC, says: “Sales volumes are falling to a rate not seen since the depths of the pandemic, as inflation continues to bite and households cut back spending. Discretionary purchases were hit hard, especially white goods and homeware, while consumers also traded down to cheaper brands in food and non-food alike. While the Jubilee weekend gave food sales a temporary boost, and fashion sales benefited from the summer holiday and wedding season, this was not enough to counter the substantial slowdown in consumer spending.
“Retailers are caught between significant rising costs in their supply chains and protecting their customers from price rises. The government needs to get creative and find ways to help relieve some of this cost pressure – the upcoming consultation on transitional relief is a golden opportunity to ensure that retailers aren’t overpaying on their business rates bills. Government action on transitional relief would make a meaningful difference to retailers’ costs and ease pressure on prices for customers.”
KPMG’s Martin adds: “As the cost of living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases. Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers. With a long run of hot weather predicted and many consumers choosing to holiday at home this summer, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”
Essential spending rises with fuel prices: Barclaycard
Meanwhile, Barclaycard says that card spending grew by 6.2% in June, year-on-year, with spending on essential items up by 4.4% as fuel prices rose. But spending on household goods fell (-5.1%), suggesting that shoppers are delaying buying some discretionary items.
Spending on non-essential items grew by 7.1%, as shoppers made seasonal purchases of sports and outdoor products (+4.9%) and clothing (+2.4%). But digital and content subscriptions defines (-4.2%) and shoppers reviewed their spending and cancelled those they could live without.
Barclaycard’s parallel consumer spending survey – which questions 2,000 people – found 91% of respondents were concerned about the effect of rising household bills on their personal finances, with 66% now confident they could live within their means (down from 71% in May).
José Carvalho, head of consumer products at Barclaycard, says: “The continued rise in fuel, food and energy prices means consumers are having to budget and seek out value where they can for both essential and non-essential purchases.
“While this cautionary approach is impacting supermarket and individual basket spend, there are bright spots to be found, with Brits increasing their discretionary spending on entertainment, travel and takeaways as we head into high summer.”
