New figures released by the British Retail Consortium (BRC) signal a decline in sales volumes not seen since the depths of the pandemic, with sales for the three months to June for non-food retail falling 3.3%.

The BRC says during 2020/21 much of UK retail “bounced between being open and closed”, significantly impacting sales and changing consumer behaviours.

“Sales volumes are falling to a rate not seen since the depths of the pandemic, as inflation continues to bite, and households cut back spending. Discretionary purchases were hit hard, especially white goods and homeware, while consumers also traded down to cheaper brands in food and non-food alike. While the Jubilee weekend gave food sales a temporary boost, and fashion sales benefited from the summer holiday and wedding season, this was not enough to counter the substantial slowdown in consumer spending.

“Retailers are caught between significant rising costs in their supply chains and protecting their customers from price rises. The government needs to get creative and find ways to help relieve some of this cost pressure – the upcoming consultation on transitional relief is a golden opportunity to ensure that retailers aren’t overpaying on their business rates bills. Government action on transitional relief would make a meaningful difference to retailers’ costs and ease pressure on prices for customers.”

Five weeks from 29 May-2 July 2022 in UK retail

• On a total basis, sales decreased by 1% in June, against an increase of 10.4% in June 2021. This is below the three-month average decline of 0.8% and the 12-month average growth of 3%.
• UK retail sales decreased 1.3% on a like-for-like basis from June 2021, when they had increased 6.7%. This was above the three-month average decline of 1.5% and below the 12-month average growth of 1%.

Three months to June in UK retail

• Non-food retail sales decreased by 3.3% on a total basis and 4.2% on a like-for-like basis. This is below the 12-month total average growth of 5%. For the month of June, non-food was in decline year-on-year.
• In-store sales of non-food items increased 2.2% on a total basis and 0.6% on a Like-for-like basis since June 2021. This is below the 12-month growth of 35.5%.
• Online hon-food sales decreased by 9.1% in June, against a decline of 5.9% in June 2021. This is above the three-month average decline of 10.3%.
• The non-food online penetration rate decreased from 43.3% in June 2021 to 39.4% this June.

Paul Martin, UK head of retail at KPMG, says: “Retail sales continued to slide for the third month in a row, albeit down just 1% on what was a strong June 2021 and against a backdrop of unprecedented price rises on the high street.

“Online shopping continued to move in reverse with total sales down 9%  as non-food purchases related to the home, such as furniture, home appliances and computing, suffered the biggest falls in online spending.  The jubilee weekend, which saw street parties across the UK, provided some relief for food and drink retailers as sales grew by nearly 1.5% year on year, despite the rising cost across most items.

“As the cost living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases. Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers.  With a long run of hot weather predicted and many consumers choosing to holiday at home this summer, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”

In May, UK inflation hit a 40-year high at 9%, with experts warning clothing retailers will see demand sink as consumers prioritise spending on essentials.

By Just Style