Retail sales rose 1% in August compared to July’s figures, with equal rises in both volume and value of sales, according to the ONS. Compared to August last year, retail sales increased 2.4% - the 52nd consecutive month of YoY growth in retail sales. The figure was higher than the forecast of only 0.2%; however, the rising retail sales volumes is likely to be driven by tourism growth, as UK consumers remain under pressure from rising inflation and stagnant wages, and continue to rein in non-essential spending. Driven by the continued low value of the pound, international trips to the UK reached record levels in July, up 6% YoY, according to the ONS. International visitor spend also reached the highest monthly amount since records began in 1961, at £2.8bn.
The macro retail sales backdrop highlights the challenges facing retail, and the polarising retailer performance in the market. Discount grocer Aldi has reported record sales in 2016, up 13.5%. Aldi also reported positive sales in the quarter to September 10, up 15.6%. Group sales at Ocado rose 14.3% in the 13 weeks to August 27, while retail sales were up 13.1% - although order size dipped, average orders per week rose 16%. And River Island also posted strong sales results, with total sales up 3.5% in the year to December 31, helped by online and mobile sales, up 21% YoY.
However, some major retailers continue to struggle to drive growth in the current environment. LFLs at House of Fraser fell 5.2% in the 26 weeks to July 29, while online sales dropped 9.8%. LFLs at Kingfisher dropped c.2% in the six months to the end of July, while sales at French Connection dropped 1.6% to £68.1m in the half year to the end of July. However, pre-tax losses narrowed to £5.7m, compared to a loss of £7.9m in the same period last year.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838