UK retail sales pick up, fashion gets online boost says BDO tracker

July’s retail sales improved as far as discretionary categories were concerned, BDO’s regular monthly High Street sales Tracker showed on Friday (2 August).

Like-for-like sales in those discretionary categories grew by 3%, although there was a clear skew towards online with in-store sales up only 1.1% while e-sales rose 8.7%.

This was also noticeable for fashion specifically with overall growth of 5.7% but with in-store fashion was up a tiny 0.4%.

Looking at the big picture, it was the third successive positive month, but it’s clear that online is regaining some momentum and the enthusiastic return to physical stores may be running out of steam (although we’re still hearing that those who do turn up are spending more).

Sophie Michael, Head of Retail and Wholesale at BDO, said: “Despite another month of strong growth in online sales, the performance on the high street is once again underwhelming. As the summer holidays kicked off and brought some warm weather, the boost in fashion sales suggests consumers may be investing in their summer wardrobes, albeit not from stores. As we move into August many retailers, particularly those in tourist hotspots, will be making every effort to benefit from tourist spend as UK consumers travel abroad.

“There are reports of record numbers of tourists arriving at our airports in the UK, including those escaping the busy streets of Paris due to the Olympics. However, for many retailers – and particularly those in the luxury space – there is the risk of becoming a ‘window shop’ for tourists who visit stores, but choose to purchase elsewhere. The sector is keeping up the pressure on the new Government for a rethink on the scrapping of VAT-free shopping for overseas visitors; with many believing it leaves the UK uncompetitive in comparison to other European destinations.

“Looking ahead, despite the positive uplift we’ve seen this month, August typically sees retailers record lower sales volumes. Retailers will be increasingly nervous that this trend of disappointing growth in their stores, and consumers continuing to shift to online shopping, will become a permanent fixture for the industry. If consumers aren’t spending in stores, then retailers will certainly hope that – for the summer at least – tourists could fill some of that revenue gap.”