Fashion sales improve in August but still a category… | kbnmart

UK consumer spending and retail sales rose in August, two reports released on Tuesday showed, but there was good and bad news on the fashion front.

Barclays said thatConsumer credit card spending returned to growth, rising 1% year-on-year after two straight months of declines, although that was well below the latest CPI inflation rate of 3.1%, so volumes were clearly low.

Non-essential spending also picked up (up 0.7%) “thanks to the delayed arrival of barbecue weather which supported butchers’ shops and garden centres”.

Meanwhile, nearly half of Britons said they enjoy buying affordable luxury items, such as pastries and cosmetics, even on a tight budget.

In addition to general consumer spending, Barclays said the retail sector returned to growth for the first time since March, although the rise was only 0.1%.

But while the onset of sunny weather last month helped garden centres, it had little impact on clothing retailers, which saw only a slight “improvement”, down 1.7% compared with a 2.3% fall in July, “with clothing remaining one of the most popular areas for consumers to discount”.

Barclays Bank said that of the 46% of Britons who say they plan to make cuts, 53% say they will spend less on clothes and accessories.

Meanwhile, figures from the British Retail Consortium and KPMG in their regular retail sales report showed that total retail sales rose by 1% year-on-year in the four weeks from July 28 to August 24, well below the 4.3% recorded a year earlier. However, the figure was above the three-month average of 0.4% but below the 12-month average of 1.2%.

The bad news was that non-food sales fell 17% in the three months to August, compared with a 0.2% decline in August 2023, although that was better than the 12-month average decline of 2%. For August alone, non-food sales were also falling.

Physical stores fared the worst. In-store non-food sales fell 2.8% over the three months to August, compared with a 1.3% increase in August 2023. But online, those sales rose 1.5% in August, compared with an average decline of 1.7% in August 2023.

However, clothing sales – in contrast to Barclays’ figures and despite consumers’ intention to cut spending – were in positive territory, although the retail sales index did not say by how much.

“While computing performed well as college students made the most of summer sales and prepared for the new school year, other back-to-school sales were weaker than usual as some families opted for second-hand purchases,” said BRC chief executive Helen Dickinson.

“Despite the recent arrival of summer and a slight uptick in consumer confidence, shoppers were unable to catch up with their spending in August, with overall sales growth reaching just 1%, reflecting the challenging retail environment that is likely to dominate the rest of this year,” added Linda Ellett, head of consumer, retail and leisure at KPMG in the UK.

“After a difficult few months of falling sales, sports and travel equipment saw a welcome boost over this key summer holiday period, while clothing sales also saw a second month of growth on the high street. Fashion retailers will be hoping that sales growth continues as they look to clear excess summer stock as we head into the key autumn season.

“Consumer sentiment is gradually improving, but there is still some nervousness about potential tax increases and the cost of turning the heating back on when the cold weather arrives. The fragile nature of consumer confidence means that shoppers will continue to rely on price and value, moving from brand to brand to find the best price benefit, and we are likely to see retailers using promotional activity to try to win this.”