Brits continue to spend despite economic uncertainty
On the day the CBI has released its quarterlyresults we’re continuing to see warning signs for the retail sector, despite more short-term positives being reported by the July's ONS retail report.
Whilst the CBI is warning retailers to expect the sharpest deterioration in retail conditions in over ten years the ONS remains a little more positive, pointing to an overall increase of 0.2% month on months for sales in the sector, buoyed by a near 7% increase in online spending. Alongside this, there has been a 0.5% increase in retail sales when compared to the last three months, and year on year growth of 3.9% (spend) and 3.3% (quantity).
The highlight of this month’s release has to be the almost 7% increase in online sales, which has already been showing steady and healthy growth all year. This is the biggest rise in online sales in three years and shows a level of consumer confidence that is somewhat at odds with the uncertainty we’re experiencing around Brexit and other economic contributors.
We can, of course, speculate as to the reasons behind this. I suspect there’s a level of lethargy with many highstreets as brands start to invest more in their online presence rather than in their bricks and mortar portfolio. This has left many city and shopping centres with more empty premises than they’d like and for those stores that are still around, we could question if some are in need of investment to attract shoppers back in. Add in too the recent heatwave we’ve experienced, and whilst we all love a bit of sunshine, trawling around a city centre to shop can feel like hard work when it’s 28 degrees outside and you can shop online from the comfort of your home or office on any device you have to hand. Then there’s simply the fact it seems to be getting easier; from custom apps to easier and simpler ecommerce sites. Are brands finally getting to grips with their online experience to keep their customer’s spending?
Department stores are finally starting to experience growth, with ONS reporting a month on month increase of 1.6% following six months of decline. It’s suggested that this is due to new clothing lines and an increase in promotions, though there’s recognition that monthly figures can be volatile so this may be a one-off.
Food stores are continuing to struggle with a negative 0.2% year on year contribution to overall sales and negative 0.6% month on month. Whilst this is being compared to a peak in 2018, this is an area that is having difficulty finding the right set of ingredients to trigger more significant growth and so we continue to watch in earnest to see whether this trend can be reversed.
Despite being only a slightly more positive picture, the ONS continues to be at odds with data released by KMPG and the British Retail Consortium who, like the CBI, are wary of what the future holds for retail especially as a conclusion to Brexit gets ever closer. There’s a fight for every pound that is being spent and there’s only so long the industry can slash prices and hold even longer promotions before more fundamental change must take place. But for now, as we await hearing what impact the summer holidays have had on the state of the sector, we hold our breath and hope that whatever is causing the general public to carry on spending continues into the second half of the year.
Surprise boost in June retail sales as shoppers hunt for bargains
June's ONS retail report shows a surprise bounce in retail sales as bargain-hungry consumers finally look to be taking advantage of the summer sales
Share this Post