-By Ankita Dutta
In a dreary turn of events, the United Kingdom’s (UK) 26-month streak of consecutive positive retail sales took a hit last May. Adding to that misery, the fashion sector continued to record poor results for a third month in a row. The dismaying figures marked an unfortunate end to a series of encouraging results since March 2021. BDO, an accountancy and business advisory firm, unveiled their latest data indicating a total of 1.5% decline in like-for-like (LFL) sales last month. The results were a significant setback, with BDO labeling the figures as “extremely discouraging.”
Despite the positive growth of footfall during May and the support of three public holidays, total in-store sales only grew by 1% during the month. The online sales damage counteracted that, plummeting a “stark” 3.3%. Notably, the fashion sector was the only category that recorded the third-consecutive-month of negative sales growth for a total decline of 1.5% compared to last year’s 27.6% LFL sales growth. BDO noted that it was the first time in over two years that the fashion sector reported negative sales.
On the other hand, the lifestyle sector had the only total positive LFL sales growth in May. Despite recording its sixth consecutive month of positive LFL sales, results only managed to reach 0.7%, not enough to soothe an industry weakened by the pandemic and inflation rates that had become too high for retailers to cope. Sophie Michael, BDO’s Head of Retail and Wholesale, underlined that “LFLs are an absolute value,” noting that the figures suggested significant drops in volumes. “These results highlight the huge pressure on the consumer purse,” she shared. According to her, retailers are facing fierce competition from the hospitality and leisure sectors, competing for every pound of discretionary spending.
Michael also shed light on the decline in online sales, citing it as the worst online sales result on record, excluding the months with Covid-19 impacts. According to Michael, in order to contend for consumer’s non-essential spending, businesses must continually invest in the industry, however, due to consumers opting to save instead of spend, retailers will inevitably aim to pinpoint opportunities to reduce expenditures. She added that there are reports showing a decline in headcount numbers and investments, something that has not happened since 2009.
In the opinion of the speaker, businesses that make strategic and wise investments will position themselves ahead of competitors in the future, however, the current economic situation poses significant worries. Continued inflation, potential interest rate rises, and significant increases in mortgage repayments this year means things may worsen before they get better for the retail sector,” Michael concluded.
