In July, food and drink emerged as the strongest performers on the high street, even as overall retail sales growth decelerated.
- According to the British Retail Consortium, retail sales in the UK grew by 1.5% in July, marking a decline from the previous year’s growth.
- Food sales surged by 8.4%, surpassing the 12-month average, amidst a slight easing in inflationary pressures.
- Non-food retail sectors experienced a downturn, with online sales hitting their lowest point since the pandemic’s onset.
- Consumers continue to grapple with ‘super-shrinkflation’, where reduced product sizes accompany rising prices, impacting purchasing power.
In July, food and drink remained resilient as the leading categories on the high street. The British Retail Consortium’s KPMG retail sales monitor reports a 1.5% increase in total UK retail sales over the four weeks up to July 29. This figure represents a slowdown compared to 2.3% growth seen in the same period last year, and it is also below the three-month average of 3.5%.
The food sector, however, outperformed expectations with an 8.4% jump in sales, which exceeds the 12-month average growth figure of 7.8%. This growth was supported by a slight reduction in inflation, which had previously hit a high of 19.2% in March.
Conversely, non-food sales fell by 0.5% over the three months leading up to July. This decline is notably below the 12-month total average growth of 0.6%. Helen Dickinson, Chief Executive of the BRC, highlighted that the damp weather further dampened sales, particularly for clothing and seasonal goods.
Online retail also faced challenges during July, with a year-on-year decline of almost 7%, representing the lowest proportion of non-food sales conducted online since the pandemic began. This trend underscores the continuing consumer shift back towards physical stores.
The concept of ‘super-shrinkflation’ has become a pressing concern for consumers, as an investigation revealed that rising prices are now accompanied by a reduction in product sizes. Paul Martin, UK Head of Retail at KPMG, remarks on the tough climate, noting the increased reliance on promotions as retailers strive to attract cautious consumers. “Price-conscious consumers are becoming acutely aware of where to find bargains, impacting retail margins and profitability,” he stated.
The retail sector’s landscape in July has been significantly reshaped by shifting consumer behaviours and ongoing economic challenges.
