NEWS21 August 2023

Retail sales fell in July

Cost of Living News Retail Trends UK

UK – The volume of retail sales in Britain fell by an estimated 1.2% in July, following a rise of 0.6% in June, according to figures from the Office for National Statistics, with retailers blaming poor weather and increased living costs.

supermarket shopper pushing trolley in front of grocery shelves

The value of goods bought also decreased in July (-1%) compared with June.

Food stores sales volumes fell by 2.6% in July 2023, while non-food stores sales volumes (the total of department, clothing, household and other non-food stores) fell by 1.7%.

Supermarkets and other retailers reported that the drop in volume over the month was due to wet weather reducing footfall, according to the ONS retail sales bulletin (published on 18th August).

However, retailers also indicated that the increased cost of living and food prices continued to affect sales volumes. Other ONS data found that the price of food and non-alcoholic beverages increased by 14.9% in the 12 months to July 2023.

Food store sales volumes were 5.1% below the levels recorded prior to the pandemic in February 2020. 

Non-store retailing sales volumes (predominantly relating to online retailers) increased by 2.8% during the month of July. The ONS data also found that 27.4% of retail sales took place online, an increase from the 26% recorded in June and the highest proportion since February last year ( 28.0%).

Silvia Rindone, EY UK&I retail lead at EY UK & Ireland, said: “Despite a slow July, retailers should see sales improve in August as families start shopping for the start of the new school year in September. ‘Back to school’ is often the highest spending season in retail after Christmas.”

“Amid continued cost-of-living pressures, many shoppers will still be looking for bargains or making the most of private label goods. Many homeowners are also worried about rising mortgage rates, which will inevitably lead to further pressures on discretionary spending as consumers look to cover the increase in household bills.

“This year, retailers have had to remain vigilant of the economic factors affecting discretionary spending – factors that have changed on a monthly basis. This planning and agility will need to continue as consumers once again re-evaluate their spending habits. While there may be a temptation to keep prices elevated in order to recoup any losses from earlier in the year, this could hurt sales volumes as consumers cut back on non-essentials.”