Retailers record moderate growth ahead of critical Golden Quarter trading period
Retailers record moderate growth ahead of critical Golden Quarter trading period
- Total like-for-like retail sales in-store and online grew by +3.1% in September
- High street stores recorded sales growth of +3.7% compared to September 2024
- Discretionary spend growth remains below inflation meaning sales volumes are down
Total like-for-like retail sales in discretionary categories (fashion, homewares and lifestyle) recorded retail sales growth of +3.1% in September, compared to a strong base of 4.7% in September 2024. This is according to the latest High Street Sales Tracker from accountancy and business advisory firm BDO.
In-store sales grew by +3.7% compared to the same month last year. This is one of the highest figures so far this year and follows on from August’s positive performance when in-store sales grew at their highest rate in two years. However, sales online ticked up by just +3.0% in September, compared to a very strong base of +11.6% in September 2024.
Despite these sales figures, the rate of growth in-store and online was below the rate of inflation, meaning that sales volumes compared to last year fell in September.
Sophie Michael, Head of Retail and Wholesale at BDO, commented: “These results will be seen as a positive trend as we move into the critical golden quarter, particularly given the exceptionally tough economic backdrop.
“However, the timing of the Budget, two days before Black Friday, could have significant implications for the retail sector. Retailers were caught out last year with the higher-than-expected NIC hikes combined with the impact that the Budget had on consumer confidence. There is no doubt that investment decisions are being deferred even further as businesses await the forthcoming Budget and understand its bearing on their short and medium term cashflows.
“Reports elsewhere also suggest that there are reduced orders being placed with suppliers as retailers fret over the level of spending. At the same time, consumers will be approaching their spending choices with caution; the speculation and noise around the Chancellor’s Budget may cause the shopper to tighten their belts. Depending on the outcome, December will be critical to the Christmas trading results.
“It’s also worth noting that our analysis is focused on discretionary spend. Households are seeing persistent high inflation in food prices, which rose by 5.1% in August. As we approach Christmas and consumers start thinking about the richness of the Christmas table, we may well see them rein in spending on categories such as fashion and homewares products in favour of luxury food items.
“Retailers are going to have navigate this quarter very carefully, ensuring that they use promotions and pricing strategically to attract consumer spending. Otherwise, they risk being left with high excess stock in January, further eroding their margins and profits and setting them up for a very challenging start to the new year.”
ENDS
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