The fashion industry faced significant challenges in the month of April, as revealed by the latest BDO retail sales report. Despite the colder weather, consumers showed little interest in updating their spring wardrobes, leading to weak sales growth in the fashion, lifestyle, and home sectors. Online sales in particular were disappointing, with only a 0.6% increase compared to the previous year, despite a significant 6.4% surge in April 2022. This indicates a notable shift towards physical shopping and highlights the growing strength of brick-and-mortar stores compared to online platforms.
Sophie Michael, the Head of Retail and Wholesale at BDO, analyzed the report and emphasized that these numbers provide further evidence of reduced discretionary spending. As competition for consumers’ wallets intensifies, consumers are still choosing to visit physical stores, potentially due to rising prices. Shopping in-store allows them to avoid additional delivery costs and potential returns. However, despite the preference for physical shopping, overall sales volumes and transaction values remain low both online and in-store.
Taking a closer look at April’s performance, the month started on a positive note with a 4.96% increase in the first week compared to the previous year. The second and third weeks, which included the Easter weekend and school holidays, also saw growth of 7.02% and 3.58%, respectively. However, sales experienced a significant decline in the final two weeks, with a 2.99% decrease in the fourth week and only a minimal 0.18% increase in the fifth week.
The current period of high inflation and interest rates continues to pose challenges for retailers. Furthermore, as foreign holiday bookings reach pre-pandemic levels, there is potential for negative consequences for the retail sector. With consumers allocating their spending towards travel expenses, there is less discretionary income available for retailers. Additionally, the anticipation of more people planning to travel abroad suggests that the summer months may be quieter than usual for UK retailers, especially on the high street.
Despite the challenges, increased foreign travel presents some potential benefits. Consumers are likely to replenish their holiday wardrobes and indulge in beauty products. Moreover, the preference for travel may lead to an influx of tourists visiting Britain. However, it is expected that this will primarily benefit tourist hotspots rather than the entire country, leaving some areas that are in greater need of support at a disadvantage.
Useful links:
1. Forbes: How Brick-And-Mortar Stores Are Making a Faster Recovery Compared to Online Shopping
2. BBC: UK High Street Retailers Brace for Tough Summer
