Retail sales growth stumbles in April with online sales hit hardest - Business Leader News

Retail sales growth stumbles in April with online sales hit hardest

April saw weak retail sales growth across the lifestyle, homewares and fashion sectors, with particularly poor online sales, according to new data revealed by accountancy and business advisory firm BDO LLP.

According to BDO’s High Street Sales Tracker, total like-for-like (LFL) sales, in-store and online combined, rose by +2.2% in April. Total in-store LFLs climbed by +4.4% in the month, from a strong base in April 2022.

However, online sales remained flat, with total non-store LFLs increasing by just +0.6% from last April’s base of +6.4%.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “These results are yet more evidence of a reduction in discretionary spending as the competition for the consumer purse continues. Footfall data shows that consumers are getting out on the high street, and as prices rise, shoppers may be more inclined to shop in-store rather than paying extra for delivery and potential returns. However, overall sales volumes and transaction values remain low both in store and online.”

Looking across the month, April started positively, with retail sales growing +4.96% in the first week, compared to the same week the previous year. The second and third weeks, which included the Easter weekend and coincided with the school holidays, were also positive, recording sales growth of +7.02% and +3.58% respectively. The retail sector’s performance dipped significantly in the final two weeks of the month, with sales growth falling to -2.99% in week four, and +0.18% in week five.

Sector Results

The lifestyle category once again outperformed the fashion and homewares sectors, growing sales by +5.6% compared to April 2022.

Despite an expectation that many consumers would be looking to update their spring and summer wardrobes at this time of year, total LFLs for the fashion sector grew by just +1.7% in April, its second consecutive month of poor results.

The homeware sector also didn’t perform well, with sales falling -3.0% based on the same month last year. As consumers’ finances remain under pressure and interest rates remain high, it comes as little surprise that sales of larger ticket items like furniture and electronics are falling significantly.

Sophie continued: “This period of high inflation and high-interest rates continues to be really challenging for retailers. Bookings for foreign holidays have now reached pre-pandemic levels, which could result in a number of consequences for the retail sector. Consumers spending on foreign travel means less discretionary spend for retailers and there is also a risk that with more people planning to travel overseas, the summer months may be even quieter than usual for UK retailers, particularly on the high street.

“However, with an uptick in foreign travel, the sector could benefit from an influx of overseas tourists which could make up some of the shortfall. Unfortunately, this is likely to disproportionately benefit tourist hot spots rather than the whole of the UK and some of the areas that may need it the most.

“While the Easter holidays gave the retail sector a boost, footfall across the month did not lead to a rise in spending. With three Bank Holidays coming up in May, we may see some improvements, but with another potential interest rate hike on the horizon later in the month to manage persistently high inflation, it is likely that consumers will continue to cautious and tighten their purse strings for the foreseeable future.”