During the recent heatwave in the UK, shoppers surprised experts with their resilience and willingness to spend. Despite the squeeze on the cost of living, which impacted spending on travel and dining out, Britons flocked to purchase summer fashion and goods for outdoor activities in July.
The British Retail Consortium (BRC) reported an increase of 2.3% year on year in the value of total sales at its member retailers, which consist mainly of big chains and supermarkets. This is a positive contrast to the declining sales seen in the previous three months. On a like-for-like basis, sales rose by 1.6% after experiencing a downward trend for the past four months.
However, it is important to note that these figures do not factor in inflation. With inflation currently running close to double digits, the overall volume of sales has actually decreased. Helen Dickinson, Chief Executive of the BRC, highlighted that consumer confidence remains weak, and the rise in interest rates combined with talks of a recession are unlikely to alleviate the situation.
Despite this, data from Barclaycard paints a surprisingly healthy picture of consumer spending in July. There was a significant increase of 7.7%, driven by sales of fashion, beauty products, and domestic holidays. Increased spending on essential items, which have experienced fast-rising prices, also supported this growth. Spending on utilities surged by 44% and fuel spending rose by 30%.
Barclaycard’s data reveals that spending on non-essential items increased by 8% compared to the previous year and by 1.3% month on month. The combination of inflation, hot weather, and the summer and school holidays likely contributed to this boost in discretionary spending across various categories.
Clothing retailers outperformed the overall non-essential spending figure, with a year-on-year uplift of 8.7% and a 4% increase on a monthly basis. Pharmacy, health, and beauty stores also experienced strong growth, with an 8.6% increase year on year and a 3.1% increase on a monthly basis.
The sporting and outdoor retail sector also benefited from the heatwave, seeing a 1.7% increase compared to June.
Although consumers reduced spending on international travel and dining out, there seems to be a slight improvement in confidence regarding household finances. In July, 66% of consumers felt better off, which is lower than the previous year but higher than the figure of 59% recorded in June.
Overall, the combination of hot weather, inflation, and the holiday season had a positive impact on UK shoppers’ spending habits. While challenges such as weak consumer confidence and rising prices remain, it appears that the fashion industry and certain retail sectors were able to maintain steady growth during the heatwave.
Useful links:
– BRC July 2021 Retail Sales
– Barclaycard Consumer Spending July 2021
