Retail sales return to growth, but consumer spending languishes

On a total basis, retail sales increased by 0.3% in the month to July 27, against an increase of 1.6% the previous year. Like-for-like sales increased 0.1%, down from a 0.5% uplift the previous year, according to the latest BRC-KPMG Retail Sales Monitor.

Despite returning to positive growth, the 0.3% sales uplift still represented “the lowest figure recorded for the month of July” since the monitor began in 1995 and “comes after the worst June on record”.

More widely, non-food sales slumped by 2% on a like-for-like basis and 2.1% on a total basis, over the three months to July.

Food sales saw a 1% fall in like-for-like sales and 0.3% based on a total basis – the lowest three-month average since December 2014.

The growth of online sales of non-food products also slowed – growing 3.7% in July against 7.5% uplift for the same month in 2018.

Online penetration increased to 29.8% last month.

Dickinson said the sector had experienced a “punishing” few months and called on the government to freeze future business rates rises.

She said: “While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry. The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.

“Whereas last year’s glorious sunshine and World Cup finals led to strong consumer demand over the summer, this year has been weak in comparison, with both June and July showing the lowest sales on record for their respective months. And it is not just high streets that are suffering, with non-food online growth also one percentage point below the 12-month average.

“The challenging retail environment is taking its toll on many high street brands who must contend with rising import costs, a multitude of public policy costs, and ever-higher business rates. A coherent strategy for retail is needed. The government should freeze future business rates rises and fix the appeals system before embarking on a wholesale reform of this broken tax system.”