UK retail volumes increase as growth outpaces inflation in August

Sales in bricks-and-mortar stores grew by 5.2 per cent year-over-year (YoY), the highest level of growth in two years, since August 2023, following several months of poor performance on the high street. The online retail continued the strong performance it has recorded throughout this year, with sales increasing by 6.6 per cent YoY, BDO said in its latest ‘High Street Sales Tracker’ report.

For the first time this year, the rate of sales growth in-store and online was above the rate of inflation indicating that volumes have also increased.

“Retailers have been under huge pressure this year, particularly on the high street, so these results will make very welcome reading for the sector. Given the disappointing performance of bricks-and-mortar stores this year, the strong growth of in-store sales during August is a very encouraging sign for retailers as we head into the crucial pre-Christmas trading period. However, it is likely that some of this growth was driven by heavy discounting and promotions, as retailers focussed on clearing their stock ahead of the autumn season,” said Sophie Michael, head of retail and wholesale at BDO.

She added that while this approach may have boosted sales in the short term, it inevitably impacted profits and would not be sustainable during the ‘Golden Quarter’ leading up to Christmas. With retailers’ costs rising, partly due to changes in National Insurance contributions, maintaining margins would be critical, and ongoing discounting would not be a viable option for many.

Michael also noted that good weather in August supported high street footfall but warned that autumn’s worsening weather could make it harder to attract shoppers.

She emphasised that while the results were positive, they came after a prolonged period of weak growth and ahead of a challenging few months of rising costs and fierce competition.

“Retailers will have to work very hard to maintain the level of growth we’ve seen this month, optimising their product and pricing, and making their stores places that customers enjoy spending time,” added Michael.

ALCHEMPro News Desk (SG)