Consumer caution prevailed in October, according to the latest BRC-KPMG Retail Sales Monitor, which reports that UK total retail sales increased by +2.5% in October, against growth of +1.6% in October 2022.
Non-food sales declined YoY – online, non-food sales decreased by -2.5% in October, against a decline of -6.3% in October 2022. In terms of online sales growth, Furniture as a category fell to 9th place of 10, from 5th in September (and 1st in October 2023).
The proportion of non-food items bought online decreased to 36.5% in October from 36.6% in October 2022.
Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), says: “Retail sales growth slowed as high mortgage and rental costs further shook consumer confidence. Many households are also delaying their Christmas spending in the hopes they can grab a bargain in the upcoming Black Friday sales.
"The cost of living squeeze meant more was spent on lower-price indulgences, such as beauty products – the so-called ‘Lipstick Effect’. Meanwhile, the arrival of some colder weather helped to boost fashion sales, particularly for outdoor wear.
“Retailers continue to invest in lowering prices and streamlining their operations, part of their commitment to delivering an affordable Christmas for their customers. But this is put at risk by the £470m-per-year rise in business rates facing retailers next year. The Chancellor must freeze rates in the upcoming Autumn Statement, to prevent extra cost pressure, pushing up prices for struggling consumers.”
Paul Martin, UK head of retail at KPMG, adds: “Retail sales remained weak in October, with growth of just +2.5%. Food and drink and health and beauty categories continued to drive sales, while a mild October saw consumers put off shopping trips to replenish winter wardrobes. Online sales continued to struggle, with negative sales growth recorded in every category other than health and Other Non-Food. This could herald the most competitive Black Friday period that we’ve seen in a while.
“Whilst consumers are now operating in a lower inflationary environment compared to October last year where inflation peaked at over 11%, there is no doubt that the last 12 months have taken a toll on confidence and their ability to spend. Coupled with a higher interest rate environment, dwindling Covid savings and the heating coming back on, beleaguered consumers are thinking very carefully about how they spend their money. As a result, the strong demand that has kept some retailers afloat over the last 18 months is now falling away.
“Although the retail sector has done some sterling work around controlling their own cost environment, the health of the industry is at the mercy of macro demand. Retailers are facing a challenging Christmas, competing for a shrinking share of wallet, driven by promotions that will no doubt cut into already-stretched margins. With spending levels expected to be much more muted this year, the run-up to Christmas could be the most challenging we’ve seen since pre-pandemic days.”
