September saw the slowest retail sales growth since stores reopened after Covid due to a combination of inflation, economic crisis and an unexpected bank holiday, figures show.
Total in-store and online sales were up just 2.8% in September from a year ago, according to BDO’s High Street Sales Tracker (HSST).
This follows a similarly poor set of results in August, which was the previous lowest post-Covid performance for retail sales.
The month started with a sales increase of 3.9% and a second week peak of 4.9%, before falling to 2.8% and 1.3% in the third and fourth weeks, respectively.
The fourth week coincided with the bank holiday to commemorate the Queen’s funeral.
Fashion sales rose a disappointing 6.7% last September, when retailers would normally expect shoppers to spend on their fall and winter wardrobes.
Lifestyle sales rose just 1.2%, even down from August, the sector’s previous worst performance since stores reopened in February last year.
September was also a disappointing month for the home goods sector, with total sales falling 6.3%, believed to be a reflection of consumers postponing larger purchases after spending significant sums on upgrading their homes during Covid closures.
Sophie Michael, head of retail and wholesale at BDO, said: “While the overall comparison is not receding across all discretionary spending categories, it is clearly trending downwards.
“Furthermore, at the current level of the pound against the US dollar and the euro, import-dependent retailers are paying more for their products, sucking up already slim margins.
“The only bright spot is that with the pound weak, the UK becomes an attractive destination for foreign tourists doing their Christmas shopping. However, this is unlikely to provide much of a boost to retailers beyond flagship stores in major cities.
“Retailers will need to focus on mitigating these impacts, making operational savings wherever possible and being very smart about purchasing their products, keeping them relevant and focused on their target customer, thereby limiting the risk of large stocks at the end of the season. .
“However, with such turbulence in the broader economy, there is little that retailers can do to preserve their business and therefore there is no doubt that the sector must prepare for a harsh winter ahead.”
Meanwhile, the latest footfall figures from the British Retail Consortium (BRC)-Sensormatic IQ show that total UK footfall decreased 9.8% in September from the previous three years, a comparison designed to avoid related fluctuations. with Covid, an improvement of 2.6 percentage points from August.
High streets experienced a drop of 11.9%, while visits to shopping centers fell 22.7% compared to three years ago.
BRC Chief Executive Helen Dickinson said: “Influx reached its highest level since the start of the pandemic, reaching 10% of its pre-pandemic levels.
“These figures belie the collapse in consumer confidence that has resulted in falling sales volumes throughout the year. Meanwhile, rising cost inflation is putting upward pressure on prices.”
Andy Sumpter, Sensormatic Solutions, said: “While total UK retail saw footfall recovery rise to an all-time high this year compared to pre-pandemic levels in September, driven in part by Back-to-school trading earlier in the month, retailers won’t be looking at street performance through rose-colored glasses.
“With all eyes on the golden quarter, perhaps with an air of caution more marked given the financial turbulence seen in recent weeks and the higher energy bills that began to affect consumers from October, many already are lowering Christmas business forecasts amid shaky consumer confidence. ”