Oct 7, 2022
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UK retail sales struggled in September, but fashion stayed positive

Oct 7, 2022

September saw the slowest retail sales growth since shops reopened post-Covid, as inflation, economic crises, and an unexpected public holiday took their toll on trading, the latest BDO High Street Sales Tracker (HSST) showed on Friday.

Photo: Pixabay/Public domain

And while it said total like-for-like (LFL) sales increased by 2.8% compared to September 2021, Sophie Michael, Head of Retail and Wholesale at BDO, warned that the actual performance for retailers may be worse than these results suggest. 

As prices are rising fast, the data suggests that the actual volume of sales "is down significantly” because it’s mainly inflation driving sales higher, rather than people buying more.

In September last year, sales had risen 19.7%, although that impressive figure was affected by the fact that retail was bouncing back from the pandemic. 

The weak figures for September 2022 followed poor results in August as well.

So how exactly did September pan out? It began with total LFLs seeing an increase of 3.88%, compared to 19.59% for the equivalent week last year. Growth then peaked in the second week of the month at 4.86% compared to the same week in September 2021. 

However, the second half of the month saw a significant slowdown, with sales growth of just 2.76% and 1.33% in the third and fourth weeks respectively. And don't forget that those figures look extremely anaemic given that inflation was heading towards double-digits so rises of just 1% or 2% actually represented falls in real terms.

The fourth week of the month coincided with the public holiday to mark the funeral of Queen Elizabeth, which will no doubt have impacted sales figures.

Was there any good news? Yes and no. September marked 19 consecutive months of positive total LFL sales figures for the fashion sector, with a rise of 6.7% from a base of +32% a year ago. 

However, at a time when retailers would normally expect shoppers to be spending on their autumn and winter wardrobes, this “disappointing result reflects heightened consumer caution when it comes to discretionary spending”.

Homewares sales fell 6.3%, from a base of +7.9%. Having spent significant sums refreshing their living spaces during Covid lockdowns, many consumers are now likely tightening their belts and postponing bigger single purchases.

Sophie Michael added: “With the pound’s current level against the US dollar and euro, retailers that rely on imports are paying more for their products, eating into already slim margins. The one bright spot is that with the pound’s weakness, the UK becomes an attractive destination for overseas tourists doing their Christmas shopping. However, this is unlikely to provide much of a boost to retailers beyond flagship stores in major cities.

“Retailers will need to focus on mitigating these impacts, by making operational savings wherever possible, and being very smart with their product purchasing, keeping it relevant and focused on their target customer, thereby limiting the risk of high stockholdings at the end of the season. However, with such turbulence in the wider economy, there is only so much that retailers can do to preserve their business and there is therefore no doubt that the sector needs to brace for a harsh winter ahead.”

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