Back-to-school rush boosts retail sales, but food sales fall

Retail sales volumes rose by 0.3 per cent in September 2024 following a rise of 1.0 per cent in August, official data showed Friday.

The non-food stores sales volumes – the total of department, clothing, household and other non-food stores – rose by 2.5 per cent in September, following a rise of 0.6 per cent in August, the Office for National Statistics (ONS) reported.

The strongest sub-sector growth was from other non-food stores, which rose by 5.5 per cent over the month to September 2024. Within “other non-food”, computer and telecommunications retailers had the strongest contribution to growth.

Partly offsetting this, supermarkets sales volumes fell by 2.4 per cent leading to the largest month-on-month fall for food stores this year. Overall, food sales fell 1.9 per cent last month.

“Comments from retailers pointed to unseasonably poor weather and consumers continuing to cut back on luxury food items,” the ONS said in its report

Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, noted that the Autumn/Winter wardrobe refresh and back-to-school rush propped up retail sales in September delivering a post-summer boost, despite record-breaking rainfall and a sharp drop in consumer confidence in September.

“As we enter the all-important Golden Quarter, retailers will be doing their best to pull out all the stops to ensure retail sales continue to pick up pace during this crucial period, particularly as competition for spend increases in the lead up to Christmas. However, this is largely dependent on consumers feeling more confident to spend, and with talks of a “painful” Autumn Budget many will undoubtably be feeling nervous about what’s to come on 30 October,” Baker said.

“Retailers too, are in need of clarity and support from the government. While business rates reform continues to be their number one plea, the prospect of an increase in workforce-related costs will be crippling news for many. The sector remains optimistic about the outlook for 2025, but it needs the government’s help to make this a reality.”

Silvia Rindone, EY UK&I Retail Lead, also said the next few months will be critical as retailers brace themselves for the Golden Quarter, with key shopping events such as Halloween and Black Friday drawing near.

“Retail sales could still be volatile in the run up to Christmas, with retailers who can target particular customers seeing more success,” Rindone said.

“However, this year's discounting efforts seem to be more spread, indicating less pressing need to offload stock as retailers have learned improved inventory management. However, the possibility of a 'Black November' remains, as retailers spread out the trading period to avoid the intense competition of the year-end rush.

"As we progress through the final quarter, it will be imperative for retailers to closely monitor sales volumes, inventory, and the competitive landscape. The balance between timely promotions and the risk of premature discounting is delicate; retailers must navigate this with care to avoid the pitfalls of either scenario—be it stock shortages or overstock. It's a precarious path that demands strategic foresight and agility."