The latest retail sales data by the BRC-KPMG Retail Sales Monitor (RSM), an accurate monthly measure of UK-wide retail sales performance, has revealed a surge in consumer confidence, leading to a 4.1% increase in total retail sales for the month of August.
However, non-food retailer sales, which includes clothing retailers, fell 0.2% on a total basis over the three-months to August. This is below the 12-month average growth of 0.9%.
For the month of August, non-food was in growth year-on-year and for the three months to August on a year-over-year basis in-store non-food sales increased 1.3%. But this is below the 12-month average growth of 3.6%.
Online non-food sales decreased by 1.7% in August, against a decline of 6.1% in August 2022. This was shallower than the 3-month and 12-month declines of 3.1%.
Helen Dickinson OBE, chief executive of the BRC believes that retailers are hoping the upward trend of consumer confidence will continue especially in the clothing and footwear sector where families held back on spending on children’s uniforms and other back-to-school products till the very last minute.
“Easing inflation will certainly be welcomed by consumers, but as the rate of price rises falls, so will the extra spending needed by consumers. As a result, sales growth may fall in the coming months, even if volume growth does not,” said Dickinson.
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Covering the four weeks from 30 July to 26 August 2023 the overall data marks a significant improvement from the 1.0% growth recorded in the same period last year. But it is important to note sales figures are not adjusted for inflation. Given that both the August SPI (BRC) and July CPI (ONS) show inflation running at higher-than-normal levels, the rise in sales masked a likely drop in volumes once inflation is accounted for.
Paul Martin, UK head of retail at KPMG, notes: “With shoppers becoming more calculated and aware of what they are getting for their money than we have seen for a long time, retailers will have to fight harder for every sale. Having survived the pandemic and continuing to battle through the cost-of-living crisis, we are already starting to see the resilience of the sector begin to fade, and high street casualties are starting to emerge.”
Following up on Martin’s point, Steve Ponting, director at Software AG explains that whilst we may be seeing a boost in consumer confidence and a drop in headline price rates, the industry must remain mindful of the lag effect of the continued supply chain pressures.
He added: “Supply and demand are more difficult than ever to predict, so there is a renewed importance of businesses having real-time accurate data at their fingers to enable fast decision making and to optimise demand forecasting and buying processes. As we edge closer to the golden quarter for retail, businesses need to get their houses in order – or risk falling mercy to matters that are outside of their control.”
In April, clothing sales underperformed, as the poor weather left customers thinking twice before decking out their summer wardrobe and high inflation rateS meant customers were receiving less value for their money.