Summer rain dampens retail demand

investmentweek.co.uk:

Despite the poor weather, IGD’s Shopper Confidence Index increased for the fourth month running, reaching its highest level since December 2021.

This is a marked fall from the previous July's 2.3% growth and well below the three-month average of 3.5%.

Furniture and food and drink were the best sellers, although the rate of growth was the lowest since January. Sales growth was driven by inflation as volumes remained in negative territory, in part due to the unseasonably wet weather, especially compared to last July's heatwave.

Shop price inflation falls to lowest level of 2023

The wet weather also meant no need to restock summer wardrobes, with all categories of clothing falling into negative sales territory, in what is usually a busy month for clothing retailers.

Online sales continued to slide, falling nearly 7% year on year, with just a handful of categories, such as furniture, health and beauty, performing well, as the long-term trend back to in-store spending continued, leading to the lowest online penetration rate since the pandemic began.

Paul Martin, UK head of retail at KPMG, said: «We are starting to see a big rise in the number of promotions that retailers are putting in place in order to get shoppers through the door, as they battle to keep market share.

»Price conscious consumers are shopping more carefully, more aware of where bargains can be found and what they are getting for their money, which is biting hard into retail margins and profitability. 

«UK consumers have been hugely resilient throughout the cost-of-living crisis, but stubbornly high inflation coupled with rapidly rising interest rates will test their ability and willingness to keep on spending for the rest of this year.»

Helen Dickinson,