UK retail sales sluggish last month, fashion lags

There was a bit of good news but more bad news for both retail sales and fashion sales on Friday. The latest BDO High Street sales tracker showed that sales are continuing to rise, but by less than inflation, and that online sales were up strongly, but were mainly boosted by widespread discounting.

BDO summed it all up saying “the British high street’s summer of disappointment continues into autumn”.

That was in reaction to in-store sales growth of just 1.8% and, as mentioned, while online jumped 11.6%, the leap was propelled by markdowns, which means tight profit margins are being squeezed further.

It’s a disappointing start to the so-called golden quarter and it doesn’t bode well for the Christmas period, although at this stage there’s still everything to play for.

BDO said that overall retail sales grew by 4.7% last month compared to September 2023 with online leading the charge, the aforementioned discounting most likely coming as retailers struggled to clear summer stock when distinctly autumnal weather arrived early in the month.

Particularly bad news for fashion is that its sales in-store grew by just 1.4%, even less than the 1.8% seen across all the sectors being tracked and well below the inflation rate.

Sophie Michael, Head of Retail and Wholesale at BDO, said: “These results reflect recent reports that retailers have been cutting prices in categories like fashion and homewares to clear their unwanted stock before product lines change for autumn and winter, ahead of the Christmas period.

“However, while this aggressive discounting may have driven cash flow in the short-term, it means that retailers’ margins are under more pressure than ever. It’s clear that retailers are still struggling to get shoppers out onto the high street – and crucially, to purchase items in-store.

“These sales figures may appear positive at first glance, but they show clear issues for the sector as we approach the most critical time of year. The reliance on discounted online sales to drive growth is not only putting huge pressure on retailers’ margins, but it is also a very costly way of doing business because of the high level of returns. It simply isn’t sustainable.”