Hot weather and World Cup fail to bring desired boost to retailers as July sales fall short of expectations
- July like-for-like retail sales rose 0.5%, compared to 1.1% in June and 0.9% in 2017
- Food sales have their best July in five years, but most non-food sales fall
- Consumer spending up 5%, according to separate report by Barclaycard
While sun-loving Britons splashed out on food, drinks and cooling fans – food retailers had their best July in five years – the rest of the High Street suffered, with most non-food categories booking declines.
July’s pace of growth compares to a 1.1 per cent rise in June, according to the closely watched retail sales monitor by the British Retail Consortium (BRC) and KPMG.
Sales of cooling equipment and fans rose last month, but other home accessories declined
Over the three months to July, food sales rose by 3.1 per cent on a like-for-like basis, the highest since July 2013.
Sales of clothes, fans and cooling equipment also rose in the period, but home accessories, furniture, footwear, computing and stationary fell.
Paul Martin, UK Head of Retail, KPMG, said: ‘For all the hopes placed on the World Cup and the glorious weather, it seems retail sales still fell short of expectations. It was perhaps just too hot to hit the high street!
Online sales of non-food products grew 7.5 per cent in July, a bit slower than a 8.3 per cent increase in July 2017 and below three-month and 12-month averages.
Martin added that it will take more than events-based retail and sunshine to improve the health of the high-street.
‘Retailers must improve efficiency, in many cases reinvent themselves and adapt to the changing retail environment, including last week’s interest rate rise,’ he said.
Demand for summer clothes is slowing and shoppers are not browsing new ranges
The report also found that, three months into a period of warm weather, demand for many seasonal items has slowed, while the weather keeps shoppers away from browsing new ranges.
‘For many in the industry, autumn could not come sooner,’ added BRC chief executive Helen Dickinson.
‘Last month’s sweltering temperatures kept shoppers focused on eating, drinking and keeping cool. However, total sales growth slowed as the heat laid bare the underlying weakness in consumer spending,’ she said.
It comes as another monthly report suggests consumer spending got a boost last month, rising by 5 per cent on last year – the third consecutive month of growth at or above 5 per cent.
Broader data from Barclaycard, which takes into account eating out, petrol and leisure activities, shows that essential spending climbed 8.7 per cent in July, driven by a strong rise in supermarkets of 6.7 per cent.
England’s World Cup performance helped lift pub spending by 16.8 per cent in July, the biggest increase since April last year.
Amid some of the highest prices at the pump since 2014, petrol expenditure also grew significantly, up 13 per cent.
However, Barclaycard director Esme Harwood cautioned: ‘It’s clear that some consumers remain cautious about what’s to come with interest rates rising and overall confidence in household finances down slightly from June.’
Laura Suter, an analyst at AJ Bell says added that ‘the hangover is looming’, with households now concerned about the effect of last week’s interest rate rise on their finances.
‘The hike last week will hit those who are in debt, including many who are already struggling to make ends meet,’ she said.