The Office for National Statistics (ONS) revealed that retail sales in September slumped across high streets and supermarkets as shops were knocked by customers’ continued cost-of-living concerns and closures for the Queen’s state funeral.
The ONS said retail sales in September declined by 1.4%. Non-food stores sales volumes fell by 0.6% and are 2.7% below February 2020 levels. However, clothing stores saw sales volumes rise by 0.1%, mainly driven by growth in footwear stores.
Key experts across the fashion and retail industry reacted to the September 2022 data:
Kelly Miely, Retail Partner at Deloitte:
“The expected sales lift from the return to school did not materialise, with non-food sales volumes falling 0.6% on the previous month, a marked 2.7% below pre-pandemic levels. Leisure activities outside of the home are increasingly becoming a luxury many are deciding to do without as they choose to stay in to help save money.
“Similarly, in a sign that consumers are making conscious cuts to their spending on groceries, food sales volumes were down 1.8%. With consumers becoming more price-sensitive, they are making difficult trade-offs, for instance choosing cheaper brands of goods or stores or simply doing without.
“Affordability will be on consumers’ minds as they start to think about festive celebrations this year. This will mean many consumers looking to buy more of their Christmas shopping on promotions compared to last year. A more competitive promotional retail environment could intensify in the run up to the festive season as spending continues to weaken. Retailers will be looking to Black Friday as an opportunity to attract a thriftier consumer.”
Silvia Rindone, EY UK & Ireland Retail Lead:
“Today’s ONS retail sales data reflect the challenges facing consumers, with inflationary pressures and falling confidence leading to a decline in sales volumes for second consecutive month.
“Non-store retail continued its downward trajectory, falling 3% in September. However, as we enter the ‘golden quarter’, and with Black Friday a few weeks away, this may change. The FCI also found that that nearly two fifths (41%) of shoppers are planning on doing most of their deal hunting online this year. The news will be welcome to many pure-play online retailers, particularly fashion retailers, who have been experiencing high commodity prices, rising delivery costs and product returns as well as issues with excess stock.
“The biggest challenges for retailers this Christmas will be pricing, inventory and how to deal with falling demand. The latest EY ITEM Club Autumn Forecast expects the UK economy to be in recession until the middle of 2023 so against this backdrop of increased uncertainty, consumers are likely to delay spending as late as possible to help manage their finances.”
Dr Jackie Mulligan, Government High Streets Task Force expert and ShopAppy Founder:
“This latest retail sales data shows the worrying downward trend in sales and spend happening on our high streets. The small retail businesses that line our high streets are under phenomenal pressure at present, and the appalling events of the past few days in Westminster have simply added to the uncertainty.
“People simply aren’t spending amid the cost of living crisis and with their mortgage payments now going through the roof, too, their disposable income is reducing even further. People are understandably tightening their belts and the result is that small retailers selling non-food products are in a highly precarious position. They are facing a triple whammy of rising costs at home, rising costs in their business and financially squeezed customers who are spending less.
“The best thing we can all do is avoid the global giants of online retail and shop with our small local businesses because any purchase from a local shop is an investment in our communities. As small retailers suffer, the global giants like Amazon have the financial advantages stacked in their favour to ride out the storm. This will be to the detriment of high streets and local communities up and down the country.”
Darren Morgan, ONS Director of Economic Statistics:
“Retail sales continued to fall in September after a weak August, and consumers are now buying less than before the pandemic.
“Drops were seen across all main areas of retailing, with falling sales in food stores making the largest contribution. Retailers told us that the fall in September was partly because many stores were closed for the Queen’s funeral, but also because of continued price pressures leading consumers to be careful about spending.”
Lynda Petherick, Retail Lead at Accenture:
“While not a surprise, retailers will be disappointed that the back-to-school sprint didn’t lift sales this September.
“With inflation now rising at the fastest rate in 40 years, retailers will need to take action in order to both retain and support consumers in the last months of the year. As rising costs remain front of mind, retailers can’t lose sight of what’s important in helping them weather the storm. Ensuring their workforce is fighting fit for the festive season is key, as well as driving internal efficiencies and removing excess cost to protect margins and avoid passing it to the consumer. If they haven’t done these things already, it may be a difficult few months ahead.”
Richard Lim, CEO of Retail Economics:
“The unsurprising fall in retail sales clearly underlines the harsh economic climate that SMEs are currently facing. The fact is, many small business owners are at breaking point. The cost of COVID-19 for the self-employed – including lost clients, loss of earnings and loan repayments – sits at a total of over £126 billion.
“Now the weight of roaring inflation and economic turmoil is being thrust on SME owners’ shoulders. The UK’s self-employed are a driving force behind our growth, and they desperately need a helping hand. Instead, they are being stifled by years of economic uncertainty.
“When addressing the cost of living crisis, the government cannot forget the crucial role small business owners will need to play when it comes to our recovery. If the Chancellor is to deliver on his high-growth, low-tax plans, SMEs need to be front and centre of the response.”
Amy Bastow, Managing Director of StorIQ app:
“Even with the shutdown of shops for the Queen’s funeral, shoppers are clearly tightening their purse strings ahead of a possible recession. Although sales volumes are continuing their downward trend, the cost of goods is going up and stores will be grappling with how much they can pass onto the consumer. It’s likely that the upcoming Christmas shopping period will give a much needed boost to the sector but attracting consumers to stores will need fresh thinking. I think we’ll see savvy retailers look to embrace more experiential activation in the form of pop-up events or creating extra value for consumers.
“Retailers should also increase their focus on visual merchandising of affordable luxuries, such as inexpensive jewellery, lipsticks, or decorative items for the home, as these impulse buys tend to perform well during a recession. Moreover, savings need to be made elsewhere to weather the storm. It’s been reported that some retailers are planning store closures, yet many are still ignoring the cost savings that can be made through improving operational efficiency. Closing stores should be a last resort once all other avenues have been exhausted.”