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Cost-of-living crisis weighs on retail sales as inflation soars

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UK Retail sales have grown at their lowest rate since February 2021 as high inflation and the deepening cost-of-living crisis limits consumer spending
Retail sales have grown at their lowest rate since February 2021.
// The UK saw its lowest like-for-like sales growth last month since February 2021, figures show
// But the fashion sector continues to outperform the lifestyle and homeware sectors, recording total sales growth of 15.2%

UK Retail sales have grown at their lowest rate since February 2021 as high inflation and the deepening cost-of-living crisis limits consumer spending, the latest BDO High Street Sales Tracker show.

Total like-for-like sales in June rose by 8.4% compared with a year ago, with an 8.8% fall in homeware sales suggesting that Brits are postponing large purchases as inflation bites.

However, the fashion sector stood out as strong, outperforming the lifestyle and homeware sectors, recording total sales growth of 15.2% – the 16th consecutive month of positive figures.


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In contrast, lifestyle sales through online channels fell for the eighth consecutive month, sparking concerns that consumers are reducing their discretionary spending in the sector.

BDO head of retail and wholesale Sophie Michael said: “These results confirm that the outlook for retailers is of concern. With consumer confidence at historically low levels, real wages falling to a 20-year low and interest rates set to rise further, there are few signs of encouragement for retailers.

“The fashion sector has undoubtedly been boosted by consumers refreshing their wardrobes for summer holidays. However, the weak sales growth for online retailers and the negative results for the homewares sector are key indicators that consumers are tightening their purse strings on discretionary spend and in particular on big ticket items.”

“Retailers who have accumulated high levels of stock are now faced with a real challenge: with their own cost base rising, they cannot afford to discount it to increase sales, but neither can they afford to sit on unsold product. Effective management of stock levels and working capital will be essential for retailers to trade successfully through this period of unprecedented challenge.

“Ultimately, however, retailers will be looking to the government to use the levers at its disposal to get inflation under control, ease the cost-of-living crisis and create the economic conditions where the retail sector can flourish.”

BDO’s figures come as total UK footfall fell by 10.5% in June on three years previously, according to British Retail Consortium (BRC)-Sensormatic IQ data.

Footfall on high streets fell 13.9% on June 2019, while shopping centre visits were down 24.1%.

BRC chief executive Helen Dickinson said: “Rising inflation, particularly soaring energy costs, is limiting customer spending power and damaging consumer confidence.

“This is only set to worsen in October as the energy price cap rises and the colder weather increases usage.

“With many people struggling, retailers are doing all they can to support their most vulnerable customers – from expanding value ranges to offering discounts to vulnerable groups, raising staff pay and investing in lower prices for the future.”

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