Beauty, food and drink boosted August retail sales

Health, beauty and food and drink were the strongest performing categories both on the high street and online, as consumers made most of brief spells of sunshine to enjoy the summer holidays, shows a recent report, suggesting the improvement in consumer confidence.

According to figures released by British Retail Consortium today (5), UK Total retail sales increased by 4.1 per cent in August, against a growth of one per cent in August 2022. Food sales increased by 8.2 per cent on a Total basis over the three months to August. This is above the 12-month average growth of eight per cent.

Non-Food sales decreased 0.2 per cent on a Total basis over the three-months to August. This is below the 12-month average growth of 0.9 per cent. Over the three months to August, in-store Non-Food sales increased 1.3 per cent on a total basis since August 2022. This is below the 12-month average growth of 3.6 per cent.

Online Non-Food sales decreased by 1.7 per cent in August, against a decline of 6.1 per cent in August 2022. This was shallower than the three3-month and 12-month declines of 3.1 per cent.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said, “Retail sales in August improved, particularly on July’s poor performance. Sale of non-food products had their best month since February, particularly for health and beauty products as retailers continued to invest in new, exciting brands, and customers splurged on self-care. The sales figures reflected the improvement in consumer confidence in August, and retailers hope this general upwards trend will carry on. Not all areas benefitted, clothing and footwear saw weaker growth as families held back spending on children’s uniforms and other back-to-school goods until the last minute.

“Easing inflation will certainly be welcomed by consumers, but as the rate of price rises falls, so will the extra spending needed by consumers. As a result, sales growth may fall in the coming months, even if volume growth does not. Furthermore, high interest rates and high winter energy bills will put pressure on many households to spend cautiously. Retailers are combatting this through a clear focus on great value for consumers, expanding budget ranges, and finding ways to cut costs where possible.”

Paul Martin, UK Head of Retail, KPMG, “August saw a bounce back in retail sales growth to 4.1 per cent, which will come as a relief for many retailers. Health, beauty and food and drink were the strongest performing categories both on the high street and online, as consumers made the most of brief spells of sunshine to enjoy the summer holidays. Internet retailers continue to struggle as online sales fell yet again in August, dropping by 3 per cent year on year.” As summer comes to an end, retailers will have their sights firmly set on the most crucial period of trading as consumers get ready for Christmas.

“Inflation levels are heading in the right direction, albeit much more slowly than hoped, and savvy shoppers will be Christmas bargain hunting much earlier this year, as price continues to drive decisions and consumers seek out good deals to stretch their budgets.  With shoppers becoming more calculated and aware of what they are getting for their money than we have seen for a long time, retailers will have to fight harder for every sale. 

Commenting on food and drink sector performance, Sarah Bradbury, CEO at IGD, said that despite the disappointing summer weather, August saw food and drink sales recovering some momentum that was lost in July. The progress of the Lionesses in the World Cup brought cheer to consumers and an excuse for get-togethers around game times. 

“However, inflation remains the dominant driver of headline growth in the sector and, although lower now than the peaks seen a few months ago, it remains high by historical standards.

“Shopper sentiment was more muted in August, matching the disappointing summer weather. IGD’s Shopper confidence Index declined marginally, following recent gains. Shoppers remain concerned about the relatively high food inflation. Fewer now believe food prices will get cheaper in the next year (eight per cent vs 11 per cent last month). Only 13 per cent expect food prices to return to their 2021 level.”