BDO: Online Retail Outperforms High Street In July

• Total sales in discretionary categories grew by +3% in July
• Online sales grew by 8.7%, with in-store sales lagging behind with just +1.1% growth
• Fashion sector saw overall growth of +5.7%, but in-store sales rose by just +0.4%

Retail sales grew by +3% in July compared to the same month in the previous year, which marks the third successive positive month, according to new data from BDO’s High Street Sales Tracker.

However, this growth across discretionary categories – the fashion, lifestyle and homeware sectors - was primarily driven by online sales, which grew by +8.7% compared to July 2023. In-store sales in these sectors grew by just +1.1% compared to the same month last year – a poor set of results for the high street, following similarly low levels of growth recorded in June.

BDO’s data shows that total like-for-like sales increased most in the lifestyle and fashion sectors, by +2.2% and +5.7% respectively, while homeware sales fell by -0.3%.

Sophie Michael, Head of Retail and Wholesale at BDO, commented: “Despite another month of strong growth in online sales, the performance on the high street is once again underwhelming. As the summer holidays kicked off and brought some warm weather, the boost in fashion sales suggests consumers may be investing in their summer wardrobes albeit, not from stores. As we move into August many retailers, particularly those in tourist hotspots, will be making every effort to benefit from tourist spend as many UK consumers travel abroad.

“There are reports of record numbers of tourists arriving at our airports in the UK, including those escaping the busy streets of Paris due to the Olympics. However, for many retailers – and particularly those in the luxury space – there is the risk of becoming a ‘window shop’ for tourists who visit stores, but choose to purchase elsewhere. The sector is keeping up the pressure on the new Government for a rethink on the scrapping of VAT-free shopping for overseas visitors; with many believing it leaves the UK uncompetitive in comparison to other European destinations.”

Sophie Michael concluded: “Looking ahead, despite the positive uplift we’ve seen this month, August typically sees retailers record lower sales volumes. Retailers will be increasingly nervous that this trend of disappointing growth in their stores, and consumers continuing to shift to online shopping, will become a permanent fixture for the industry. If consumers aren’t spending in stores, then retailers will certainly hope that – for the summer at least – tourists could fill some of that revenue gap.”

Source : BDO

Image : BongkarnGraphic / shutterstock / 310699355 

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