The BDO High Street Sales Tracker has revealed that the UK retail industry faced another difficult month in January. In-store sales in discretionary spend categories, such as fashion and homewares, declined for the fourth consecutive month. Overall like-for-like retail sales dropped by 0.8% in January, with a significant 4.2% decrease in in-store sales.
The challenging weather conditions, including storms that battered parts of the UK, contributed to the disappointing results. These adverse weather conditions kept fashion shoppers away from stores. However, when examining sector performance across both in-store and online channels, there were some notable differences. The fashion and lifestyle categories saw increases in total like-for-like sales, but the homewares sector experienced a decline of 8.4%. In-store homewares sales were particularly poor, with a 10.1% decrease.
When combining in-store and online sales, the fashion sector saw a modest rise of 0.3%. However, in-store sales for fashion specifically dropped by as much as 6.7% throughout the month, likely influenced by the disruptive weather conditions that affected footfall.
Sophie Michael, Head of Retail at BDO, expressed that retailers were hoping for a much-needed boost in sales during January after a period of poor sales in late 2023. However, the challenging month, along with anticipated adjustments in business rates and increases in the Minimum Wage, will intensify the pressure on already tight profit margins.
Michael pointed out that retailers have already resorted to heavy discounting this month and may need to extend these promotions to attract customers and reduce excess inventory levels. January was considered a critical month for retailers to recover from the losses incurred leading up to Christmas, and the lack of substantial recovery now deepens the gloomy outlook for the industry.
As the Spring Budget approaches in March, retailers will be looking to the Chancellor for targeted support. Measures such as the reconsideration of the so-called tourist tax are being considered, which would provide a welcome boost to the sector. However, uncertainty remains regarding whether these measures will be sufficient to address the current challenges faced by retailers.
Useful links:
– BDO High Street Sales Tracker: This link provides detailed information on the BDO High Street Sales Tracker, which can help readers gain more insights into the UK retail industry’s performance.
– BBC News: UK Retail Sales Fall Again in January: This link directs readers to a BBC News article offering further coverage and analysis of the decline in UK retail sales in January.
