In a modest rebound from earlier in the year, total retail sales in the UK grew by 0.7% year-on-year in May, according to the latest research from the British Retail Consortium (BRC). This growth marks a significant slowdown compared to the 3.9% increase recorded in May 2023 but shows improvement over the three-month average growth rate of 0.3%.
Divergent Trends in Food and Non-Food Sectors
The retail landscape showed a mixed performance across different sectors. Food sales rose by 3.6% over the three months to May, a deceleration from the 9.6% growth seen in the same month last year, yet still above the 12-month average growth of 6.4%. This indicates continued resilience in the food sector, which saw growth in May year-on-year.
Conversely, non-food sales experienced a decline, decreasing by 2.4% over the three months to May compared to a slight growth of 0.7% in May 2023. This drop is steeper than the 12-month average decline of 1.7%, highlighting ongoing challenges in this sector. Specific non-food categories such as DIY, gardening equipment, and clothing saw spikes in sales over the bank holiday weekend, showing that specific events and better weather conditions can still prompt consumer spending in these areas.
Sector-Specific Highlights and Challenges
Computing sales reached their highest levels since the pandemic, driven by consumers continuing to upgrade technology purchased during that time. This suggests that certain technology sub-sectors may be seeing sustained growth as consumer behaviors shift towards more permanent home office setups and updated tech needs.
Despite the overall sluggish growth in non-food sales, health, personal care, beauty products, and certain clothing categories witnessed small increases, suggesting pockets of resilience amidst broader sector challenges.
Retail Outlook and Economic Context
Helen Dickinson OBE, Chief Executive of the British Retail Consortium, expressed cautious optimism about the future, citing upcoming events like the Euros and the Olympics as potential boosts for consumer confidence and spending. “Retailers remain optimistic that major events…will bolster consumer confidence this summer,” Dickinson noted, emphasizing the role of retail in the broader economic landscape and the potential for policy to positively impact the sector.
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, commented on the challenges and potential ahead. “Whilst sales growth was minimal, it could point to some signs of recovery for the sector,” Ellett explained. She highlighted the impact of the early bank holiday and improved weather on sales, suggesting these factors helped drive the slight increase seen in May.
Looking Forward
As the UK approaches a general election, the retail sector is keenly awaiting potential economic policies that could support recovery and growth. Retailers are particularly interested in reforms such as changes to the business rates regime, which could provide much-needed relief and stimulate further investment in the sector.
Overall, while the recovery in retail sales in May was mild, it offers a glimpse of potential stabilization or even growth in the sector, contingent on broader economic improvements and supportive policy measures. Retailers and analysts alike will be watching closely to see if this trend continues into the warmer summer months, potentially heralded by major sports events and seasonal consumer activity.
