The retail industry is making huge steps towards recovery as improvements in the economy have finally begun to have a positive impact on consumer confidence. This fact has been further compounded by the warm weather, and as a result UK retail sales hit a six-month high during July.
According to the Confederation of British Industry (CBI), clothing and footwear sales skyrocketed as consumers snapped up summer staples such as flip flops and shorts. Department stores particularly benefited from this, recording their strongest trading rate in 30 years.
60 retailers took part in the survey, with 43 per cent stating that sales were higher this July than when compared to the previous year. Despite the fact that 26 per cent reported a drop in sales, the balance of +17 per cent marked the most successful month since the post-Christmas sales boosted business in January.
Furthermore, the result spelled the end of five consecutive months of reported contraction. Better yet, 39 per cent of retailers expect sales to rise still further next month, while only 29 per cent believe there is a high risk of a fall.
Head of retail and wholesale at Barclays, Richard Lowe, points out that retailers are not taking anything for granted despite the more positive environment and are still doing their bit to attract shoppers.
He says; “The UK’s first heatwave in seven years boosted high street sales, as consumers stocked up on flip flops and sunscreen.
“Even more reluctant shoppers were encouraged by sales and promotions.”
Unfortunately, the good news for the retail industry was not entirely evenly spread, as the previous consumer demand for furniture and carpets seen in early spring took a turn for the worse. And although burgers, sausages and summer beverages such as Pimms saw a month of outstanding sales, some food and drink categories fell sharply.
The CBI’s director of economics, Stephen Gifford, believes that it will be some time yet until retailers can notice true recovery.
He says; “The feel-good factor from the heatwave and early summer sales has helped boost high street sales after a very weak start to the year.
“A return to even modest spending is welcome news but the bottom line is that confidence will not bounce back fully until family finances improve significantly.”
With the good weather set to last well into August, albeit with some rainy spells as seen in the past week, retailers can only hope that the consumer thirst for summer clothing and alcoholic beverages has not yet been quenched. However, they may come to find that the spending flurry which has been ushered in by the rising temperatures may well blow over as the autumn clouds appear on the horizon.
Do you think retailers are being forced to rely on promotions and sales as a means of attracting consumers and, if so, do you believe this will have a damaging effect upon the profit margins of high street businesses in the long run?
