The latest ONS Retail Sales Index figures show that retail sales grew by +2.1% by value in May, and by +1.2% by volume.
Kris Hamer, director of insight at the British Retail Consortium (BRC), comments: “The record warmth of May led to a small recovery in retail sales for the month.
"Larger retailers outperformed small retailers, with clothing and footwear particularly benefitting from the change in temperatures. Nonetheless, sales volumes still remain below their 2021 levels.
Tom Youldon, a partner at McKinsey & Company, says: “Retail sales have bounced back. With inflation down to the Bank’s +2% target, consumer confidence at the highest level since November 2021 and a +2.9% increase in retail sales volumes, consumer activity is picking up.
“In particular, online trading in apparel is finally recovering, with textile, clothing and footwear online sales rising +9.8%. Activity was likely boosted by the May bank holidays and some willingness from shoppers to splurge on discretionary goods – although sales volumes overall still remain slightly below pre-Covid-19 levels.
“As we head into warmer months, retailers will be hopeful that falling inflation and rising wages will act as a further boost to GfK’s measure of consumer confidence, and that a combination of drier, sunnier weather, big sporting events like UEFA Euro 2024 and summer holiday purchases encourage greater spending at the tills.
"However, volatility could persist. Many shoppers are quickly swinging from saving to splurging. Retailers need to build a rich understanding of fast-changing preferences so they can deliver value through loyalty and pricing strategies – offering premium products where consumers are willing to treat themselves or tailoring product assortments in categories where shoppers are trading down or switching brands.”
Meanwhile, Jon Boland, GM of Clover in the UK, leveraging insight from Clover's own customer base of UK SMEs, adds:“UK retail returned to positive health in May, benefitting from two bank holidays and improving consumer confidence following the recent cut in energy prices. This jump in sales suggests shoppers are gaining more confidence at the checkout, with wage increases continuing to outstrip slowing inflation, which returned to the Bank of England’s target rate of +2% earlier this week.
“Analysing transaction data from across our client base of tens of thousands of small and medium enterprises (SMEs) in the UK, we see the bank holidays led to a significant uplift in spending at garden centres, sport shops, and florists. On the flipside, entertainment venues such as cinemas and theatres witnessed a decline in sales during May as consumers prioritised getting outside.
“Bigger picture, rising consumer confidence could lift the UK economy in 2024. With real incomes rising and a further fall in household energy bills expected in July, retailers will hope this latest sales data heralds a bright outlook for the summer.”
