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July retail sales grow 3.5% as online sales soar

Written by: Paloma Kubiak
In the month to July, retail sales increased 0.7% while the quantity bought rose 3.5% from the year before.

This compares with June’s retail sales which saw a 0.5% decline, according to the Office for National Statistics (ONS) data.

The quantity bought in non-store retailing showed strong growth both on a monthly and annual basis at 4.9% and 16.9% respectively.

But the clear driver of the increase in retail sales was due to online promotions, while non-food stores reported a decline in footfall in July 2018.

In fact, online spending reached a new record, taking 18.2% of sales, and department stores also saw shoppers flock to their online offerings – up 35% in the year.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said there’s really only one winner in the battle between clicks and bricks at the moment, with online sales driving retail growth onwards and upwards.

“Even the dusty old department stores are belatedly getting in on the act and have seen a huge jump in the proportion of their sales coming from online purchases.

“Internet shopping is clearly extremely popular with consumers because of its convenience, though it does take a toll on the high street.

“Even if more traditional stores are switching to the online channel, that means they need less physical space to sell stuff from. That spells more store closures, which clearly does nothing to attract people to the high street and is likely to contribute to declining footfall.”

He added that despite retail sales bouncing back in July after a disappointing showing in June, buoyed by the continuing good weather and the tail end of the World Cup, the consumer environment still looks “challenging”.

“Big rises in energy and fuel costs hitting household budgets against a backdrop of weak wage growth. The August interest rate rise is also going to increase borrowing costs for many, and though debt is still cheap, in such a constrained consumer environment that may well be enough to dampen activity,” he said.

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