Retail sales boost cools as consumers spend on entertainment

Retail sales continued to rise last month, although poor weather hampered the high street as shoppers stayed away, according to new data.

The British Retail Consortium (BRC) and KPMG monthly sales monitor found that online sales remain strong with formalwear and beauty sales particularly high, as weddings and events could once again take place following the lifting of restrictions.

Fashion store sales returned to pre-pandemic levels although with staff starting to return to offices, sales of equipment for working from home fell, alongside furniture and household appliances.

Total sales in July were up 6.4% compared to a year ago, although this is down on the three-month rolling average of 14.7%.

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Online sales slowed to growth of just 0.6% in July compared with a year ago although in July 2020 online sales had jumped 41% as the pandemic saw a huge shift in online orders.

The reopening of non-essential retailers in April continues to skew the numbers, with non-food sales up 64.9% over the three months to July, compared with the same period a year ago at the height of the pandemic.

But on a two-year basis, before the pandemic, store sales remain down 3.6% by comparison.

Food sales remain in growth, up 2.9% compared with a year ago, but, have slowed as more consumers head to restaurants and cafes following restriction easing.

The switch away from shopping in stores was confirmed in separate data from Barclaycard, which found that spending on entertainment saw growth for the first time since the pandemic began, as consumers bought tickets to the theatre, cinema and sporting events.

Around one in four said they have also been dipping into savings to make the most of post-lockdown life, with pubs, bars and clubs seeing a strong month.

Barclaycard found consumer card spending grew 11.6% in July compared to the same period in 2019 including a 4.1% rise in fuel costs, the highest since before the pandemic due to rising oil prices and more people travelling on staycations.

The entertainment industry saw growth up 8.1% and pubs, bars and clubs saw sales up 30.5% compared to July 2019.

Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “July continued to see strong sales, although growth has started to slow.

“The lifting of restrictions did not bring the anticipated in-store boost, with the wet weather leaving consumers reluctant to visit shopping destinations.

“Online sales remained strong, and with weddings and other social events back on for the summer calendar, formalwear and beauty all began to see notable improvement, so fashion outlets in particular saw a bounce back to pre-pandemic levels.”

She also warned that the number of empty shops continue to rise and high streets require further investment, urging the government to implement wide ranging changes to the business rates system.

The chief said: “Retailers want to play their part in building back a better future for local communities, and government must give them the tools to do so.”

In the food and drink sector, stores benefited from England’s strong performance in the Euro 2020 football tournament, although concerns remain over price inflation.

Susan Barratt, chief executive of the Institute of Grocer Distribution (IGD) said: “Shoppers are increasingly concerned about food and grocery price inflation, with 16% of shoppers expecting that prices will get much more expensive in the year ahead, up from just 8% of shoppers in April.”

Looking forward, Paul Martin, UK head of retail at KPMG, said he expects to see a slowdown in spending habits as economic challenges hit.

He said: “Staffing pressures, increases in commodity and component costs, rising inflation eating into households’ spending power and stalling consumer confidence could lead to a slowdown in retail sector growth as we head into autumn.”