Fashion stayed ahead in August but growth is slowing - report
BDO’s August High Street Sales Tracker on Friday showed that the last few weeks of the summer saw the slowest growth in UK retail sales figures since the sector reopened after Covid lockdowns.
Consumer confidence is at a record low and it’s clear that discretionary spending is slowing as a result, ahead of what should be the busiest retail quarter of the year.
So what actually happened last month? BDO said like-for-like (LFL) sales increased by 3.6% compared to August 2021. And sales steadily slowed as the month wore on.
Homewares was the most challenged category as sales fell 6.4% “signalling consumers are postponing large purchases”. Meanwhile, online sales slumped by 0.6%, the first negative result since March.
In-store LFLs recorded the lowest result (+8%) since the re-opening of physical shops last year.
On the plus side, August marked 18 consecutive months of positive LFL sales figures for the fashion sector, with a rise of 6% from a base of +27.6%. However, this was the sector’s lowest performance since February 2021, “raising fears that consumers may be cutting their discretionary spending and choosing not to refresh their autumn and winter wardrobes”.
Sophie Michael, BDO’s Head of Retail and Wholesale, said: “As summer gives way to autumn, retailers may be forgiven for not having much of a sunny disposition. Consumer confidence is at a record low and our data clearly shows that discretionary spending is slowing. It’s no surprise to see the homewares sector performing poorly, which is an indicator that consumers are deferring the purchase of big ticket items as households prioritise essential spend.
“The slowing of growth in fashion will raise further concerns as we head towards autumn and the Golden Christmas Quarter.
“September’s results will show just how significant the pull-back in discretionary spending is likely to be this winter, but clearly these results in August show that consumers are cutting their budgets."
She added that BDO is seeing reports that retailers are already ordering lower quantities of stock than they normally would at this time of year and that it will be critical for retailers to manage their inventory and not tie up their limited working capital in unwanted goods.
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