In August, the fashion sales in the UK showed strong growth, indicating a promising recovery for the struggling retail industry. According to BDO, an accountancy and business advisory firm, retailers reported “solid” sales for the month, with increased online spending and robust consumer demand driving the recovery. However, the report also pointed out concerns about disruptions in the supply chain due to the ongoing impact of Covid-19, which could pose a threat to the sustained revival of the sector.
Total like-for-like (LFL) sales, which include both in-store and online sales, saw a significant increase of 20.1% in August compared to the same month last year. This is particularly noteworthy considering that August 2020 had a base figure of -3.3%. The online channel played a crucial role in driving this growth, with online sales experiencing a “persistent” increase of 20%. However, footfall, or the number of people visiting physical stores, struggled to reach pre-pandemic levels, indicating a shift in consumer behavior towards online shopping.
The fashion and lifestyle sectors were the standout performers in August, recording positive total like-for-like sales. Fashion sales witnessed a remarkable surge of 27.6% compared to August last year. This is significant considering the base figure for August 2020 was -5.1%. The consistent growth in fashion sales throughout August marked the sixth consecutive month of positive total like-for-like sales for the sector. Similarly, the lifestyle sector experienced a total like-for-like sales increase of 20.6% in August, overcoming a base figure of -11% from the previous year’s August.
Despite the positive trends, Sophie Michael, the head of Retail and Wholesale at BDO, cautioned about potential challenges on the horizon. She highlighted dwindling stock levels as a possible threat, especially as the crucial golden quarter trading approaches and supply chain disruptions worsen. The gradual slowdown in growth rates may be attributed to retail spending starting to plateau after the initial surge in consumer demand following the easing of lockdown restrictions. Additionally, labor shortages and the Delta variant continue to put pressure on the supply chain, indicating that ongoing disruption and rising costs for retailers could be a persistent issue.
These challenges could result in higher prices and limited choices for shoppers as the Christmas season approaches. The logistics industry suggests that some of these issues may not be resolved until early 2022, emphasizing the need for careful planning by retailers in the coming months to avoid potential Christmas woes. While August brought positive sales figures for the fashion industry, it is crucial for retailers to navigate the upcoming months strategically to ensure a successful festive season.
Useful links:
1) BDO Retail Sales Barometer
2) Office for National Statistics – Retail Sales
