UK's 26-mth retail sales streak ends with 1.5% drop in May 2023

Despite positive footfall growth through the majority of May, total in-store sales grew by just 1.0 per cent across the month, and online sales fell into the red, down 3.3 per cent, according to the latest high street sales tracker by accountancy and business advisory firm BDO LLP.

The fashion sector recorded a third consecutive month of poor results, with total LFL sales falling by -1.5 per cent in May from last year’s base of 27.6 per cent. This is the first time in over two years that the fashion sector has recorded negative sales growth.

The lifestyle sector was the only category to record total LFL sales growth in May, however, at just 0.7 per cent, these results are far from reassuring. It marks the category’s sixth consecutive month of positive LFL sales.

Sophie Michael, head of retail and wholesale at BDO LLP, said: “These results are extremely discouraging. LFLs are an absolute value and therefore, given the high inflation rates, these figures suggest significant drops in volumes. With three bank holidays last month and the fact that footfall has increased compared to this time last year, these results highlight the huge pressure on the consumer purse. Retailers are not just competing with each other, but also with the hospitality and leisure sectors for every pound of discretionary spending. The drop in online sales is also stark, recording the worst online sales results on record with the exception of the months impacted by the COVID-19 pandemic.

“Competing for this discretionary spending requires ongoing investment in the sector but, with consumers simply not spending, retailers will be naturally looking to where they can cut costs. There are reports showing that headcount numbers for retailers declined at the fastest rate since 2009 while investment has also deteriorated. Retailers that make savvy investments will give themselves a competitive advantage in the long term, but the economic backdrop remains hugely concerning. Continued inflation, potential further interest rate rises, and significant increases to many mortgage repayments this year means things may get worse before they get better for the retail sector.”

Fibre2Fashion News Desk (NB)