Economy

Retail sales dip in May as consumers cut spending

UK retail sales decreased 1.5% on a like-for-like basis from May 2021, when they had increased 18.5%

Sales across retail decreased by 1.1% in May, against an increase of 28.4% in May 2021, as consumers continued to cut spending amid the cost of living crisis, according to the BRC

This is below the three-month average growth of 0.7% and the 12-month average growth of 4.1%. On a three-year basis, total retail sales grew 6.2% during May however, compared with the same month in 2019.

UK retail sales decreased 1.5% on a like-for-like basis from May 2021, when they had increased 18.5%. This was below the three-month average decline of 1.1% and the 12-month average growth of 1.8%.

Food sales decreased 1.3% over the three months to May on a like-for-like basis and 0.7% on a total basis. This is also below the 12-month total average growth of 0.6%. For the month of May, food was in growth year-on-year.

Over the three-months to May, non-food retail sales decreased by 1.0% on a like-for-like basis and increased 2.0% on a total basis. This is below the 12-month Total average growth of 7.0%. For the month of May, non-food was in decline year-on-year.

In-store sales of non-food items grew 31.5% on a total basis and 24.1% on a like-for-like basis. This is below the total 12-month average growth of 39.2%. In-store sales of non-food items declined 57.5% over the three months to May on a total basis since May 2019. 

Meanwhile, online non-food sales decreased by 8.5% during May, compared with a decline of 8.1% in May 2021. This is above the three-month decline of 18.0%. In a three-year comparison online non-food sales increased by 34.7% in May. This is below the 3-month average increase of 41.4%.

Non-food online penetration rate fell to 38.7% in May from 42.2% in May 2021. However, it was up 7.3 percentage points on the 31.4% seen at the same point in 2019.

The BRC noted that these sales figures were not adjusted for inflation, and given that inflation is running at “historically high levels”, the small drop in sales “masked a much larger drop in volumes once inflation is accounted for”.

Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “Sales continued to see declines as the cost-of-living crunch squeezed consumer demand. Higher value items, such as furniture and electronics, took the biggest hit as shoppers reconsidered major purchases during this difficult time. 

“Nonetheless, fashion and beauty did well as people prepared for holidays abroad. Meanwhile, online sales appear to have stabilised at a ‘new normal’, with the share of total non-food retail sales coming through digital channels settling at around 39% compared with 30% pre-pandemic, though this is well down on lockdown peaks.”

She added: “It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation. Profits may be squeezed further, as retailers continue to find efficiencies in their own operations and supply chains to reduce the impact of future price rises for consumers.”

Paul Martin, UK head of retail at KPMG, said: “The rising cost of living is going to remain the main story for retailers for the immediate future, with consumer confidence a key factor to watch out for. Retailers will be hoping that a post-Jubilee and summer feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.

“Cost and efficiency will firmly be top of agenda for most operators, and understanding how they can protect their margins whilst remaining price competitive for consumers.” 

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