October UK clothing retail sales slow in run up to Christmas
8-11-2023
OCTOBER UK CLOTHING RETAIL SALES SLOW IN RUN UP TO CHRISTMAS
In October 2023, UK retail sales witnessed a moderate increase of 2.5%, compared to the growth of 1.6% in October 2022, tempered by inflation and cautious consumer spending habits.
The BRC-KPMG
Retail Sales Monitor (RSM), an accurate monthly measure of UK-wide retail sales
performance said that over the three months leading up to October, UK retail
total sales increased by 2.5%, which is below the 3-month average growth of
3.1% and the 12-month average growth of 4.2%.
Paul Martin, UK head of retail
at KPMG, noted that a “mild October” saw consumers put off shopping trips to
replenish winter wardrobes because the public is operating in a lower
inflationary environment compared to October 2022, Martin believes the last 12
months have knocked the confidence of consumers and their ability to spend.
“Coupled with a higher
interest rate environment, dwindling COVID savings and the heating coming back
on, beleaguered consumers are thinking very carefully about how they spend
their money,” said Martin.
Helen Dickinson OBE, chief
executive of the BRC, echoed Martins’s sentiments on factors influencing the
slowdown in UK retail sales and added: “Many households are also delaying their
Christmas spending in the hopes they can grab a bargain in the upcoming Black
Friday sales.
“The cost-of-living squeeze
meant more was spent on lower-price indulgences, such as beauty products – the
so-called ‘Lipstick Effect’. Meanwhile, the arrival of some colder weather
helped to boost fashion sales, particularly for outdoor wear.”
Recommendations
for UK retailers
Dickinson touched on the need
for retailers to continue investing in lowering prices and streamlining their
operations, especially at a time when delivering an “affordable Christmas” is
essential.
However, she warns that this
effort is at risk due to the £470m per year increase in business rates facing
retailers in the coming year.
Dickinson urges the Chancellor
to freeze these rates in the upcoming Autumn Statement to prevent additional
cost pressure, which could result in price increases for consumers.
Martin said that although the
retail sector’s cost control is important its overall health depends on macro
demand.
He continued to say that
retailers are facing a challenging Christmas season, where they will compete
for a shrinking share of the consumer wallet, driven by promotions that could
cut into already tight profit margins.
“With spending levels expected
to be much more muted this year, the run-up to Christmas could be the most
challenging we’ve seen since pre-pandemic days,” added Martin.
August UK
retail sales overview:
- Non-food
sales decreased by 1.0% on a Total basis over the three months to
October. This is below the 12-month average growth of 0.6%. For the month
of October, Non-Food was in decline year-on-year.
- Over
the three months to October, In-store Non-Food sales decreased
0.1% on a Total basis since October 2022. This is below the 12-month
average growth of 3.0%.
- Online
Non-Food sales decreased by 2.5% in October, against a decline of
6.3% in October 2022. This was shallower than the 3-month decline of 2.7%
and deeper than the 12-month decline of 2.9%.
- The
proportion of Non-Food items bought online (penetration rate) decreased to
36.5% in October from 36.6% in October 2022.
In August, UK retail sales volumes grew 0.4% in August, up from
a revised fall of 1.1% in July.
By Just Style
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