UK retail sales up 3.1% in Sept as growth eases in discretionary spend

In-store sales grew by 3.7 per cent compared to the same month last year. This is one of the highest figures so far this year and follows on from August’s positive performance when in-store sales grew at their highest rate in two years. However, online sales ticked up by just 3 per cent in September, compared to a very strong base of 11.6 per cent in September 2024, BDO said in a press release.

Despite these sales figures, the rate of growth in-store and online was below the rate of inflation, meaning that sales volumes compared to last year fell in September.

“These results will be seen as a positive trend as we move into the critical golden quarter, particularly given the exceptionally tough economic backdrop,” said Sophie Michael, head of retail and wholesale at BDO.

“However, the timing of the Budget, two days before Black Friday, could have significant implications for the retail sector. Retailers were caught out last year with the higher-than-expected NIC hikes combined with the impact that the Budget had on consumer confidence. There is no doubt that investment decisions are being deferred even further as businesses await the forthcoming Budget and understand its bearing on their short and medium term cashflows,” added Michael.

She also noted concerns about reduced supplier orders and cautious consumer spending amid persistent inflation, adding that as Christmas approaches, consumers may cut back on fashion and homewares purchases in favour of luxury food items.

“Retailers are going to have navigate this quarter very carefully, ensuring that they use promotions and pricing strategically to attract consumer spending. Otherwise, they risk being left with high excess stock in January, further eroding their margins and profits and setting them up for a very challenging start to the new year,” said Michael.

ALCHEMPro News Desk (SG)