The performance of UK retailers in August showed signs of improvement compared to the previous month, with sales volumes rising by 1.2%. This increase in sales was stronger than the overall retail sales volumes, which only saw a 0.4% growth. However, despite this positive trend, food store volumes remained 4.1% below the pre-coronavirus levels recorded in February 2020.
Accenture’s retail strategy and consulting lead in the UK and Ireland, Kelly Askew, highlighted the positive impact of the last Bank Holiday on consumer spending, particularly in the food sector. Shoppers took advantage of this opportunity to increase their spending, boosting the performance of retailers during the month.
Looking ahead, businesses are hopeful that this optimism will continue as the holiday season approaches. However, consumers may still be cautious in their spending due to the ongoing challenges of the cost of living. The unexpected fall in inflation this week provides some relief, but shoppers may still consider making cutbacks during the festive season.
Phil Monkhouse, head of sales at global financial services firm Ebury, expressed optimism about the outlook for the next few months. He believes that the latest sales figures, coupled with positive inflation data and the Bank of England’s decision to maintain the base rate, suggest that the worst of the economic downturn may be behind us.
However, Oliver Vernon-Harcourt, head of retail at Deloitte, cautioned that while the macroeconomic situation is improving and consumer confidence is increasing, the persistent food inflation is putting pressure on consumer spending. The high prices of essentials continue to impact consumer behavior and their overall purchasing power.