UK retail sales continued their upward trend in March, with BDO’s High Street Sales Tracker (HSST) reporting the 13th consecutive month of growth. A particular standout was the fashion sector, which saw a remarkable 87% increase in total like-for-like sales compared to the same period last year.
It’s important to note that the comparison to 2021 is skewed due to the full lockdown the UK experienced at that time. However, a shift in consumer behavior is evident when looking at non-store like-for-like sales, which declined by 10.8% in March 2022. In contrast, non-store sales saw a staggering 157% increase in March 2021.
The strong performance of the fashion sector in March suggests that consumers are embracing the return to normalcy and seizing the opportunities available to them. This is evident in their increased investment in new wardrobes for the spring season, with retailers reporting higher demand for swimwear and a reversal of the trend away from high heels.
The resurgence of special events like weddings and dressy occasions is also contributing to the surge in fashion sales. Consumers have overcome their previous hesitations about social contact and are actively socializing again. Additionally, the return of holidays and a faster transition back to physical workplaces are further driving fashion sales.
While both fashion and lifestyle categories have experienced notable growth, homeware sales saw a decline for the first time since April 2020. This can be attributed to shifting consumer priorities towards fashion and personal goods.
Weekly sales data shows significant growth throughout March. Cross-category sales in the first week rose by 48.31% compared to the same week in the previous year. The second and third weeks saw even higher increases of 60.87% and 94.31% respectively. Sales in the final week of March rose by 76.13%.
Head of Retail and Wholesale at BDO, Sophie Michael, pointed out that consumer spending remains high despite anticipated increases in the cost of living. However, concerns arise regarding the reliance on record levels of household borrowing to sustain this spending, especially as consumer confidence declines. Discretionary spending may pull back in the coming months, but the impact will vary across different retail sectors.
Retailers also face challenges from rising energy, operational, and supply costs, which may lead to price increases and the need for supply chain reassessment. While the cost-of-living crisis was still on the horizon in March, retailers have started planning for higher levels of inflation. However, there is uncertainty about whether costs will rise faster than expected, causing further disruption.
In light of these challenges, retailers will need to reevaluate their strategies as consumer purchasing power faces increasing pressure.
Useful links:
1. BDO’s High Street Sales Tracker (HSST)
2. BDO Retail and Consumer Industries
