Positive retail growth masks growing levels of uncertainty

Overall positive sales conceal cracks beginning to show in the retail sector
Total like-for-like sales increased by 12.4% compared to July 2021
Online sales in lifestyle record ninth month of negative results
Online homewares fall for the tenth straight month
Another month of relatively flat overall online sales indicate rebalancing across retail channels

Retail sales growth remained steady despite inflation and cost-of-living concerns, new figures by accountancy and business advisory firm BDO LLP reveal.

According to BDO’s High Street Sales Tracker (HSST), total like-for-like (LFL) sales, combined in-store and online, increased by +12.4% in July compared to the equivalent month in 2021. Total non-store LFL sales extended a four-month run of positive results at +4.8% growth, however rates have slowed, failing to reach double-digits since October last year.

July saw a better start to the month than June, with total LFL sales growing by +9.60% (compared to +4.65% four weeks previously). Total LFLs increased by +11.40% and +21.79% in the middle of the month when a heatwave spread across the country. The final week of July saw total LFL sales increase by +15.34% from a base of +29.05% for the same week last year.

Sector Results

Fashion was the strongest performer in all but the final week of July, with this month’s result marking seventeen consecutive months of positive LFL sales for the sector. Total fashion LFLs rose by +20.0% from a base of +36.5%.

Total LFL sales for the lifestyle sector increased by +11.60% in July. However, non-store LFLs for lifestyle recorded the ninth consecutive month of negative results, highlighting that consumer spending is rebalancing across channels following pandemic disruption.

The homewares category saw another disappointing month of results, with total LFL sales falling -6.0% compared to July 2021, the fourth negative month for homewares LFL sales this year. Online sales for homeware have now declined for ten straight months.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said:

“Our latest results paint a reasonably positive picture of the high street given the pressures facing consumers and retailers. With the summer in full swing and many embarking on their holidays, it is not surprising that sectors such as fashion have seen positive results over recent weeks.

“However, as people return from their annual leave and the cost of living continues to rise, together with a backdrop of rising interest rates, it is clear that there are significant obstacles ahead. Breaking down the results, we can immediately see that mid-market retailers are not performing as well as discounters or premium brands.

“Retailers will need to differentiate themselves quickly, either through value or premium product, two areas which are seeing more robust results. As retailers deal with significant inflationary rises of their own, there will be increasing competition over discretionary spending.

“As we head towards further energy bill increases and another rise in interest rates, both consumers and retailers will be looking to the government to ease cost pressures, help inspire business confidence, and lay a foundation for sustainable growth during a difficult time.”

- ENDS

Note to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy.

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.

BDO LLP
BDO LLP operates in 18 offices across the UK, employing 7,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network
The BDO global network provides business advisory services in 164 countries, with 95,000 people working out of 1,713 offices worldwide. It has revenues of $11.8bn.

Contacts

Fergus Lynch or Ellie Tudor
Tel: +44 (0)7398 345137
Email: BDO@hellolaunch.co.uk