UK total retail sales increased by +4.9% in June, against a decline of -1.0% in June 2022, reports BRC-KPMG, whose latest Retail Sales Monitor also found that UK LFL retail sales increased by +4.2% in June (against a decline of -1.3% in June 2022), and non-food sales increased +0.3% on a total basis and decreased -0.5% on a LFL basis over the three-months to June (non-food sales saw YoY growth in June).
Online non-food sales decreased by -1.0% in June, against a decline of -9.1% in June 2022. The proportion of non-food items bought online decreased to 35.3%, from 35.9% in June 2022.
Furniture ranked 7th of 10 categories – down from 3rd in May, and 6th in June 2022.
Helen Dickinson OBE, BRC chief executive, says: “Retail sales growth ticked up slightly in June as hot weather prompted purchases of summer essentials. Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day.
"People were much more cautious about big-ticket purchases like furniture and technology equipment.
“Consumer confidence remains fragile. But, with headline food inflation easing for two months in a row as prices of essentials start to fall thanks to stiff competition and consumers continuing to shift shopping patterns to mitigate as much inflation as they can, confidence could improve. However, retailers’ efforts to bring down prices could be derailed by costly reforms to the packaging levy (Extended Producer Responsibility) and a new deposit return scheme putting an inflationary £4b burden on retailers. A hike to business rates is also on the cards for next April. Government must look at how these costly policies will impact inflation and consumers and think again.”
Paul Martin, UK head of retail at KPMG, comments: “The sun was shining on retailers in June, with the warm weather bringing consumers back out to the high street and LFL sales up nearly +5% on last year.
“Online sales continued to fall, but at a much lower rate, with household appliances and gardening equipment proving popular.
“Apart from a blip in May, retail sales growth has remained steady at around +5% every month in the first half of this year. However, the growth comes against a background of much higher inflation levels – resulting in reduced margins and profitability for operators across the sector.
“As we move into the last half the year, retailers will be hoping that anticipated falls in inflation start to deliver stronger sales growth in order to improve the overall health of the sector. The wild card continues to be food inflation, which remain stubborn, and is having a negative impact on consumers’ ability to spend on non-essential items.
“Consumers have so far remained resilient, but the triple threats of further interest rate hikes, resolute double-digit food inflation and an economy recovering at slower rate than predicted, could hamper a return to much-needed profitable growth across the retail sector.”
