July sees continued improvement in retail sales, consumer spending as Brits shop local

People walk past a closed retail unit following the outbreak of the coronavirus disease (COVID-19) in Warrington, Britain, August 11, 2020. REUTERS/Phil Noble

As sunny weather and eased restrictions boost high street activity, July has seen continued improvement in retail sales and consumer spending, two separate reports show.

Retail sales increased by 3.2% in July, according to the British Retail Consortium (BRC) data, which represented the second consecutive month of growth since the start of the pandemic.

Over the three months to July, food sales increased 8.2% on a like-for-like basis and 6.1% on a total basis, reaching the highest figures since June 2009.

While food was in growth year-on-year for July, the pace was slower when compared with the previous two months, signalling a move towards more normal or pre-lockdown shopper behaviour.

Figures from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, have also confirmed this trend.

Consumer spending declined 2.6 per cent year-on-year in July, the smallest fall since lockdown began, as the shoppers began to spend more on non-essential items.

The decline of 4.7 per cent for non-essential items, in fact, meant a significant improvement from the 22.3 per cent contraction seen in June.

Brits choosing to shop locally greatly contributed to this recovery, Barclaycard said, noting 43.3 per cent jump for food and drink specialist stores – including off licences, greengrocers, and independent convenience stores – and 20.4 per cent for takeaway and fast food.

“These figures are a reflection of 45 per cent of Brits choosing to support nearby businesses, with a fifth (20 per cent) visiting local stores more often, and 19 per cent spending more than usual,” the credit card brand said in a statement.

Spending on essential items grew 3.2 per cent year-on-year, largely driven by supermarket shopping, which rose by 15.0 per cent, helping to offset a 22.2 per cent drop in fuel spend.

“It’s a welcome development for retailers to see spending up across many sectors in the first full month of data since lockdown restrictions started to ease,” commented Esme Harwood, Director at Barclaycard.

IGD’s Susan Barratt said the economic impact of COVID-19 will be felt on shopper confidence going forward.

“Retailers should prepare for increased focus on savvy shopping for the remainder of the year at least.”