16 Aug 2019

Woody, Buzz and Simba can’t deliver blockbuster month for retailers

Toy Story and Lion King releases fail to deliver a big performance for retailers in July as the UK faces up to a potential recession, with overall growth of consumer spending reportedly also below the rate of inflation.

The key findings from the Office for National Statistics showed:

  • In the three months to July 2019, the quantity bought in retail sales increased by 0.5% when compared with the previous three months, with food stores and fuel stores seeing a decline.
  • The quantity bought in July 2019 increased by 0.2% when compared with the previous month, with strong growth of 6.9% in non-store retailing.
  • Department stores’ growth increased for the first time this year with a month-on-month growth of 1.6%; this was following six consecutive months of decline.
  • Year-on-year growth in the quantity bought increased by 3.3% in July 2019, with food stores being the only main sector reporting a fall at negative 0.5%.
  • In July 2019, online retailing accounted for 19.9% of total retailing compared with 18.9% in June 2019, with an overall growth of 12.7% when compared with the same month a year earlier. 

 

Phil Mullis, Partner and Head of Retail and Wholesale at one of the UK’s leading business advisory firms, Wilkins Kennedy, said: “While it is encouraging to see retail continuing to grow – albeit at a slow pace – we must take a step back to look at the wider landscape and take these latest ONS findings with a pinch of salt.

“Strong promotional activity of stock clearance has undoubtedly helped to drive a resilient performance for retailers – particularly online – but this equally comes at a time when the UK economy suffered its first negative quarter in more than six years, and with Brexit uncertainty not helping, it means we face the very real risk of heading into a recession.

“A separate report from Barclaycard has also shown that for July consumer spending grew by 1.7 per cent - which is below the inflation rate of 2 per cent.

“Now more than ever, retailers need to be watching consumer behaviour extremely closely to try and figure out what will encourage them to spend their money in what are difficult times – those with a plan are ultimately the ones that will survive in the long-term.

“The good thing about retail is that there is always something to try and piggy back on, and August will see millions of parents preparing to send their children back to school with new uniforms and stationery – here’s hoping retailers have put their lessons into practice to ensure their sales make the grade!”

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