Retail sales growth in July slowed to the lowest rate on record for the month despite favourable weather conditions, according to industry data, with department stores suffering the most.
The value of total sales increased by 0.3 per cent compared with July last year, the lowest figure for the month since records began in 1995, according to data from the British Retail Consortium, an industry lobby group, and the consultancy KPMG.
“The UK may have had record temperatures in July, but retail sales were far from record-breaking at just 0.3 per cent growth,” said Paul Martin, UK head of retail at KPMG. “While any growth is welcome after two months of decline, it’s clear that most players need more than sunshine to get back on their feet.”
In the three months to July, nominal retail sales dropped by 1.3 per cent compared with the same period last year, the sharpest decline since the BRC began collecting the figures. The drop was largely driven by a 4.1 per cent contraction in non-food store sales, while online sales expanded 3.1 per cent over the same period.
“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,” said Helen Dickinson, BRC chief executive.
Separate data from Barclaycard, which reports on nearly half of the nation’s credit and debit card transactions, showed that sales in department stores contracted by 3.9 per cent in July compared with the same month last year.
“Spending has remained relatively subdued over the past few months, with an underlying uncertainty about the wider economic and political landscape causing many to hold off making purchases on bigger ticket items,” said Esme Harwood, director at Barclaycard.
The Barclaycard consumers’ survey also showed that almost one in three people was holding off from making a big purchase while waiting for more clarity on the economic outlook, 5 percentage points higher than in June. Meanwhile, about one in four was uncertain about job security, the highest figure in more than two years.
Consumer confidence also slipped in July to only 29 per cent of people feeling positive about the state of the economy, down from 34 per cent in June.
BRC retail sales figures were gloomier than official data in June, with discrepancies rising from the BRC figures not being adjusted for seasonal patterns and inflation as well as differences in calculating retail sales.
However, the weakening of consumer confidence and spending across several measures is a trend for a sector that has remained relatively resilient this year.
