Tuesday, August 4, 2020

Retailers hit hard as consumer confidence drops and discretionary spend wanes

With reports that consumer confidence has dropped again and wage growth has slowed, retailers have faced yet another washout month for sales.

According to the High Street Sales Tracker (HSST), published today by accountancy and business advisory firm BDO, like-for-like in-store sales fell by -0.8% in June.

The poor performance comes from a weak benchmark of -1.7% for the same period last year and is a further blow to a struggling high street that has seen 16 out of 17 consecutive months of no in-store sales growth.

As discretionary spend continues to slow, in-store lifestyle sales performed especially poorly, falling -3.5% in June from a negative base of -0.3% last year. The result continues the run of no growth for in-store lifestyle LFLs to 17 consecutive months.

The fashion sector recorded flat results for in-store sales in June, with retailers unable to improve on last year’s base of -2.3% despite starting summer sales early. Homeware was the lone bright spot on the high street as in-store sales increased +5.6% this month, but from a negative base of -2.4%.

While non-store like-for-like sales provided some relief this month (+16.5%), it marks the second lowest result for the category this year despite recording a high of +21.02% in the middle of the month.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “June was another washout month for the high street. We saw retailers discount early on in June, adding further pressure to tight margins, yet they still weren’t able to salvage the month.

“Retailers are stuck between a rock and a hard place. They want to invest and adapt but they don’t have the funds or confidence to do so. At the same time, shoppers are holding back as consumer confidence falls and discretionary spend slips away.”

Sophie adds: “June marked the third anniversary of the EU referendum yet we still have no clear path forward.

“The uncertainty for both consumers and businesses is having a crippling effect. Time is running out and the government urgently needs to take action to help save the UK high street.”

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