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‘Back to school’ fails to ignite ailing shopping sales

Paloma Kubiak
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Paloma Kubiak

Shoppers continue to rein in their spending as the cost-of-living bites, with retail sales down in the month of August, following a small uptick in July.

Retail sales monitor the quantity bought (volume) and amount spent (value) by shoppers in the UK. For August, the figures fell 1.6% and 1.7% respectively, according to the Office for National Statistics (ONS).

This continues the downward trend seen since summer 2021, following the lifting of Covid restrictions on hospitality, and in recent months, the rise in prices spurring on the cost-of-living crisis.

The ONS noted sales in all main sectors – food and non-food stores such as department, furniture and clothing stores, non-store retailing (online, stalls and markets) as well as fuel – fell between 31 July and 27 August 2022. Fuel sales volumes are 9% below their February 2020 (pre-pandemic levels).

Food store sales volumes fell by 0.8% in August 2022, which leaves them 1.4% below their pre-coronavirus levels. The ONS said retailers have highlighted they’re seeing a decline in volumes sold because of increased food prices and cost-of-living impacts.

And this ties in with recent ONS data which found that of the 91% of adults who said their cost of living had increased, 42% were cutting back on non-essential journeys in private vehicles.

Online retailers, which saw big uplifts over the course of the pandemic also saw the proportion of retail sales fall to 25.7% in August 2022 from 26.3% in July 2022. Despite this fall, it remains significantly above pre-coronavirus levels, according to the ONS.

Meanwhile, the data revealed that alcohol and tobacco sales rose by 6.3% in August.

Compared with the same period a year earlier, retail sales volumes fell by 5.1% in the three months to August 2022, while sales values rose by 5.6%. The ONS said this “reflected an annual implied growth in prices of 10.7%”.

‘May get worse before it gets better’

Oliver Vernon-Harcourt, head of retail at Deloitte, said: “All sectors saw a fall over the month, particularly large ticket items such as household goods, likely due to concerns over affordability. Many retailers would have hoped that back to school and end of summer spending would have boosted non-food categories. However, non-food volumes fell 1.9%, with consumers cutting back on non-essential items across all categories to curb growing costs.

“Retailers, who are also battling rising costs, may be revising expectations ahead of the critical Golden Quarter, with ongoing uncertainty amongst consumers around how much they will be able to spend over the coming months. In this case, it may get worse before it gets better. However, the festive period will be an opportunity for retailers to showcase the best they have to offer to attract consumer spending.”

‘The cost-of-just living has become dearer’

Danni Hewson, AJ Bell financial analyst, added: “People are clearly thinking hard about what they spend their money on. It’s just not stretching as far as it used to, and essentials have to come first. But even essentials are costing more and with the spectre of unmanageable fuel bills looming large, people did the only thing they could, cut back.

“The cost-of-just living has become dearer. For some it’s become unaffordable, for many others it’s become troublesome. With the expectation of further interest rate rises, with the nights drawing in and recession on the horizon, retail sales are likely to be under ever increasing pressure. People will still spend this Christmas, but they’ll do it thoughtfully and retailers will have to slug it out for our hard-won cash with the hospitality sector.”