Discretionary retail remains sluggish in UK, fashion dips in August

The UK’s physical stores have continued to underperform in August, a new report showed on Friday. The latest BDO High Street Sales Tracker said total sales (including stores and online) in discretionary retail categories increased by just 0.7% this month.

Taking into account current inflation, this minor growth indicates marginally increased spend but a fall in sales volumes.

Meanwhile in-store sales actually fell by 0.7% year on year and earlier reports signalling that retail prices had fallen for the first time in three years during August underlined the high level of discounting being seen.

It was a weak month for the fashion sector specifically with overall sales declining by 0.4% compared to the same month last year.

Sophie Michael, Head of Retail and Wholesale at BDO, said: “This month’s data represents minimal sales growth and another disappointing month for high street retailers. August is often a quiet month for the sector, but these numbers show that changes to consumer behaviour may continue to disproportionately impact bricks-and-mortar stores.

“We’ve seen reports of heavy discounting from retailers in order to shift summer stock, but this alone does not seem to have done the trick. With increases to energy bills expected in October and a huge number of homeowners likely to be re-mortgaging to higher rates in the latter half of this year, there is still huge competition for the consumer purse in discretionary spend categories. Other reports show spending on non-essential items seems to be lagging behind expenditure on experiences and leisure activities.”

She also said that “September will be a critical month and provide some indication of what retailers may expect from consumer spend ahead of the so-called crucial ‘Golden Quarter’ in the run-up to Christmas”.

And she highlighted how “profit margins remain incredibly narrow, especially with increased operating costs. Those who are agile enough to adapt to changing consumer demand and behaviours will likely be the best performers and play a pivotal role in stopping the British high street merely becoming a ‘window shop’ for customers”.