Retail sales growth ticked up slightly in June as hot weather prompted purchases and outdoor activities, shows figures released today (11).
Data from British Retail Consortium (BRC) show 4.9 per cent increase in sales in June, above the annual average growth rate, as shoppers hit the high street to buy swimwear, beach towels, outdoor games, garden furniture and barbecue food. Food sales rose by 9.8 per cent in June and 10.1 per cent on a like-for-like basis, despite consumer confidence remaining “fragile”.
Non-Food sales increased 0.3 per cent on a Total basis and decreased 0.5 per cent on a like-for-like basis over the three-months to June.
Helen Dickinson OBE, Chief Executive at BRC states that retail sales growth ticked up slightly in June as hot weather prompted purchases of summer essentials. Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day.
"People were much more cautious about big-ticket purchases like furniture and technology equipment.
“Consumer confidence remains fragile. But, with headline food inflation easing for two months in a row as prices of essentials start to fall thanks to stiff competition and consumers continuing to shift shopping patterns to mitigate as much inflation as they can, confidence could improve.
"However, retailers’ efforts to bring down prices could be derailed by costly reforms to the packaging levy (Extended Producer Responsibility) and a new deposit return scheme putting an inflationary £4bn burden on retailers. A hike to business rates is also on the cards for next April. Government must look at how these costly policies will impact inflation and consumers and think again.”
Paul Martin, UK Head of Retail at KPMG, says that the sun was shining on retailers in June, with the warm weather bringing consumers back out to the high street and like for like sales up nearly 5 per cent on last year.
“Sales of suntan lotion, food and clothing were all given a boost as consumers made the most of the record June temperatures. Online sales continued to fall, but at a much lower rate, with household appliances and gardening equipment proving popular.
“Apart from a blip in May, retail sales growth has remained steady at around 5 per cent every month in the first half of this year. However, the growth comes against a background of much higher inflation levels – resulting in reduced margins and profitability for operators across the sector.
“As we move into the last half the year, retailers will be hoping that anticipated falls in inflation start to deliver stronger sales growth in order to improve the overall health of the sector. The wild card continues to be food inflation which remain stubborn, and is having a negative impact on consumers’ ability to spend on non-essential items.
“Consumers have so far remained resilient, but the triple threats of further interest rate hikes, resolute double digit food inflation and an economy recovering at slower rate than predicted, could hamper a return to much needed profitable growth across the retail sector.”
Sarah Bradbury, CEO at IGD, says that June was yet another month of very high growth in food and drink sales, driven largely by ongoing inflation.
"However, there are signs of better news, with volume sales on the cusp of registering a positive performance after being almost permanently negative for the last two years. This was almost certainly underpinned by the record good weather last month.
“The hot weather in June also helped lift people’s spirits, with IGD’s Shopper Confidence Index improving to its highest level since December ’21. This filtered through to how shoppers feel about food prices, with 30 per cent now expecting food prices to stay the same or decline in the next year, compared to 16 per cent at the start of the year. Although we’re far from out of the woods, with 59 per cent of those with a mortgage or rent saying they will have to cut back their spending further to absorb the increase in mortgage costs, compared to 46 per cent in March ’23.”
