Shoppers continued to spend less online, while in-store spending grew more slowly in October as the cost of living continued to rise, the latest figures suggest. Shoppers appear to be putting off spending on more expensive items, perhaps until Black Friday, the British Retail Consortium (BRC) suggests, while instead buying products to help cut energy costs.
Total UK retail sales grew 1.6%, according to the latest BRC/KPMG Retail Sales Index, and 1.2% on a like-for-like basis (LFL) which removes the effect of store openings and closures and business. That’s down from the current 12.6% Rate of inflationmeasured in the retail price index, and the consumer price inflation rate of 8.8%, suggesting that although shoppers spend more, they buy less.
Online sales of non-food products fell 6.3% in October, after falling 8% a year earlier, the figures suggest. That’s below the three-month trend (-4.8%) but above the 12-month average drop of 13.6%.
Non-food store sales grew 1.3% in total in the three months to October, compared to the same period last year, and 0.4% LFL. That’s well below the 12-month average of 32.5% growth. Some 39.9% of non-food sales were made online in October, up from 42% a year earlier.
“As the cost of living for consumers continued to rise, retail sales slowed in October,” says Helen Dickinson, executive director of the BRC. “With November’s Black Friday sales just around the corner, many people seem to be holding off on spending, particularly on larger purchases. Clothing and footwear, which posted higher sales this year, fell as mild weather kept customers from buying winter clothing. Meanwhile, electric blankets, air fryers and other energy-efficient appliances continued to fly off shelves as people looked for future cost savings.
“Christmas will come later than last year for many and it can be more bleak than bright as families focus on making ends meet, particularly as mortgage payments mount. Retailers are hoping the World Cup and Black Friday will give sales a much-needed boost before Christmas. However, with little sign of easing cost pressures, government action is needed to support households. Retailers face a further £800m government-imposed inflationary increase in their commercial tariff bills next year, so the government should freeze tariffs and reform the broken transitional relief system for alleviate cost pressures that are driving higher prices at a time when people are less able to afford them.”
Below inflation growth
Meanwhile, food sales grew 5.1% in total and 4.7% LFL, again below inflation, suggesting that the amount of food purchased has fallen while prices are rising faster.
Paul Martin, Head of UK Retail Sales at KPMG, it says: “Despite the price of goods being higher than in 2021, retail sales during October grew just over 1% in value year over year. This increase is being driven by inflationary pressures and does not paint the true picture of declining sales volumes as consumers buy fewer products per store.
“Sales in nearly every category, both online and in-store, fell year over year as consumers adjust to reduced household incomes. Furniture, food and health products saved the day on the streets as consumers prepare for colder days at home. Online retailers saw sales decline in all categories except furniture as consumers flock to stores more often for deals to manage everyday spending.
“Retailers will hedge their bets on a successful World Cup and Black Friday to boost sales during the crucial golden quarter. Given the economic difficulties, the usual holiday boost is unlikely to be enough to offset the current problems retailers are facing with rising costs, shrinking margins and declining demand. Many may feel they have no choice but to cut prices to retain customers, but with their own inflationary pressures to contend with, excellent pre-Christmas promotions could further hurt already-tight margins. While Christmas is by no means canceled as consumers focus on a bright spot in the economic clouds, retailers face arguably their toughest holiday season in a decade as shoppers hunt for sales, hunt for bargains and shop less for meet the economic challenges ahead. ”
Barclaycard: Christmas spending will be limited
Barclaycard figures suggest card spending rose 3.5% year-on-year, again below inflation. Spending on essential items such as fuel and groceries rose 5.7%, up from 3.3% in September and reflecting rising inflation. Purchases in supermarkets grew by 4.6%, again reflecting the increase in prices.
But spending on non-essentials rose by a more modest 2.5%. Digital content and subscriptions grew 4.8% and takeout and fast food 11.7% as more shoppers chose to stay put.
Its consumer attitudes survey of 2,000 UK adults found that 48% planned to cut back on Christmas spending to save money this year. Confidence in the UK economy fell to 15%, the lowest level since 2015 and less than half the 31% recorded a year earlier.
Esme Harwood, director of barclay card, says: “Rising petrol and supermarket costs continue to bite, but Britons are spending less on energy bills as government support kicks in and people find ways to economize at home. Consumers continue to trade big nights out for cozy soirees as they cut back on discretionary spending, while health, beauty and home improvement enjoy a small boost.
“With the festive season just around the corner, we are likely to see further cuts as Brits rein in their Christmas spending. Consumers are taking a moderate approach to the holidays, seeking out secondhand gifts and setting spending limits to manage their costs during this traditionally expensive time of year.”