‘Rocky road throughout 2022’ as consumers tighten belts after heatwave spending: BRC

July could be the “lull before the storm” for retailers and consumers as improved sales was mainly due to heatwave, experts have said, predicting “rocky road throughout the rest of 2022” for retailers as consumers prioritise essentials and discretionary product spending.  

Figures from the British Retail Consortium (BRC) revealed 2.3 per cent sales rise last month compared with a 6.4 per cent rise the year before. Food sales increased 2.3 per cent on a total basis and 1.8 percent on a Like-for-like basis. This is above the 12-month Total average growth of 0.6 per cent. For the month of July, food was growing year-on-year.  

Contrarily, non-food retail sales decreased by 2.0 percent on a Total basis and 2.5 per cent on a like-for-like basis. This is below the 12-month Total average growth of 4.5 per cent. For the month of July, Non-Food was in growth year-on-year.   

Over the three months to July, in-Store sales of non-food items increased 2.0 per cent on a total basis and 1.2 per cent on a Like-for-like basis since July 2021. This is below the 12-month growth of 34.4 per cent.   

Online non-food sales decreased by 3.9 per cent in July, against a decline of 0.6 percent in July 2021. This is above the three-month average decline of 7.3 per cent and the 12-month decline of 14.1 per cent.   

Reacting to the figures, Helen Dickinson OBE, Chief Executive- British Retail Consortium, states that sales improved sales in July was due to the heatwave.   

“Summer clothing, picnic treats, and electric fans all benefitted from the record temperatures as consumers made the best of the sunshine. However, with inflation at over 9% many retailers are still contending with falling sales volumes during what remains an incredibly difficult trading period.   

“Consumer confidence remains weak, and the rise in interest rates coupled with talk of recession will do little to improve the situation. The Bank of England now expects inflation to reach over 13 per cent in October when energy bills rise again, further tightening the screws on struggling households. This means that both consumers and retailers are in for a rocky road throughout the rest of 2022.”   

Paul Martin, UK Head of Retail at KPMG said that summer could be the lull before the storm with conditions set to get tougher as consumers arrive back from summer breaks to holiday credit card bills, another energy price hike and rising interest rates.     

“With stronger cost of living headwinds on the horizon, consumers will have to prioritise essentials, and discretionary product spending will come under pressure. As margins continue to be challenged, and costs continuing to rise, a significant drop in demand come the Autumn will have detrimental impact on the health of the retail sector. Truly understanding individual customer buying patterns and being able to differentiate these will become increasingly more important for the sector.”      

Susan Barratt, CEO- IGD, “July’s food and drink value sales were again flattered by inflation, masking some ongoing dips in sales volumes. Shoppers are genuinely tightening their belts by buying fewer items in addition to switching stores and buying more private label products.   

“Our Shopper Confidence Index improved a little in July, no doubt boosted by England’s Lionesses successful Euro 2022 football campaign. Plus, the heatwave and one in four families receiving the first cost of living payment, fewer were impacted by rising energy bills (68 per cent compared to 74 per cent in April ’22). However, with food price inflation forecast to increase in the coming months and Ofgem expected to announce a significant increase in the energy price cap at the end of August, there are still significant challenges ahead.”